Lucas paradox and allocation puzzle: Is the euro area different?

Arbeitspapier

This paper examines the Lucas Paradox and the Allocation Puzzle of international capital flows referring to a panel data set of EMU countries and major industrialized and emerging economies. Overall, the results do not provide evidence in favour of the Lucas Paradox and the Allocation Puzzle. Rather, in line with neoclassical expectations, net capital flows are allocated according to income and growth differentials. The 'downhill' flow of capital from rich to poor economies was particularly pronounced in intra-euro area capital flows and after the introduction of the common currency. If we control for the fact that the assumptions of the neoclassical model are not perfectly given in emerging markets, the Lucas Paradox and the Allocation Puzzle can be dismissed for these countries too. However, in periods of financial stress, the neoclassical behaviour of financial flows is to some extent dampened.

Angaben zum Objekt

• ISBN: 978-3-95729-019-9
• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Bundesbank Discussion Paper ; No. 06/2014

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Investment; Capital; Intangible Capital; Capacity ; International Investment; Long-term Capital Movements ; Financial Aspects of Economic Integration ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance ; Comparative Studies of Countries
• Thema: Financial integration ; International Capital Flows ; European Monetary Union

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Herrmann, Sabine ; Kleinert, Jörn
• Ereignis: Veröffentlichung
• (wer): Deutsche Bundesbank
• (wo): Frankfurt a. M.
• (wann): 2014

Weitere Informationen

• Handle: http://hdl.handle.net/10419/93084
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ