Lucas paradox in the light of neoclassical theory
Journal Title: Central European Review of Economics and Finance - Year 2016, Vol 11, Issue 1
Abstract
In their analyses devoted to the directions of international capital flows, economists dealing with the subject often make references to conclusions reached by R. Lucas Jr, i.e., to the so called Lucas paradox. In literature, Lucas paradox provides the starting point for considerations on how neoclassical model works when it comes to the directions and volume of capital flowing among countries in modern global economy. This paper aims at discussing the rationale behind the study conducted by R. Lucas Jr and, consequently, the justification for his conclusion. Lucas paradox is considered in two approaches: classical, i.e., consistent with conclusions drawn by R. Lucas: capital flows between countries in amounts smaller than suggested by differences in marginal products of capital in individual countries and the flow does not equalise them; and contemporary: directions of capital flows in global economy are not consistent with those delineated by the neoclassical model, capital flows from poor (developing) countries to rich (developed) ones. Taking account of neoclassical model assumptions, in both approaches to Lucas paradox drawing "hard" conclusions with respect to directions of capital flows in contemporary economy based on quoted studies does not seem justified.(original abstract)
Authors and Affiliations
Małgorzata Janicka
Keywords
Related Articles
- EP ID EP209816
- DOI -
- Views 80
- Downloads 0
Using Akaike's Criterion and Bordered Matrices for Initial Variable Selection for Econometric Model Evaluated with Least Squares Method
In this paper the usage of bordered matrices for selection of independent variables for econometric model evaluated with least squares method is shown. AIC was chosen as criterion of selection. Practical example of the m...
The stabilizing role of unemployment benefits in Poland
This study examines the impact of unemployment benefit system in stabilizing the economy in Poland in 2008-13. The goal is to answer the question: by how much do the automatic stabilizers in the Polish unemployment benef...
Integration of Greek and Polish Equity Markets with the Euro Area Equity Market. Comparative Analysis
The aim of this article is to present the comparative analysis of integration of Greek and Polish equity markets with the Euro area equity market. The authors explain and analyze theoretical aspects and measures of inter...
The role of social services in the 21st century
The aim of the article is to examine all issues related to social services - definition, theoretical approaches, historical development, institutional and legal instruments, as well as the presentation of the particular...
Econometric analysis of selected factors of innovative companies activity in the polish economy
Today, a particularly important role in the functioning and development of enterprises plays innovation. This is understood as the ability to create innovative space capable to the creation and diffusion of innovation. N...