Has the Lucas Paradox been fully explained?

Celine Azemar, Rodolphe Desbordes

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)


Alfaro, Kalemli-Ozcan, and Volosovych (2008) argue that accounting for differences in institutional quality makes the Lucas Paradox disappear. We show that their key finding is driven by the presence of outliers. Once we control for them, we find that the Lucas Paradox remains.
Original languageEnglish
Pages (from-to)183-187
Number of pages5
JournalEconomic Letters
Issue number2
Publication statusPublished - 2013


  • capital flows
  • institutional quality
  • Lucas Paradox
  • outliers

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