Work detail

Asymmetric developments in the EU: Is the Lucas Paradox behind?

Author: Mgr. Jaroslav Štěpán,
Year: 2019 - summer
Leaders: PhDr. Jaromír Baxa Ph.D.
Consultants:
Work type: Economic Theory
Masters
Language: English
Pages: 116
Awards and prizes:
Link:
Abstract: Development in European Union is showing that even despite high amount of effort in
economic integration, differences in cross-country development are still at play. Indications
about Lucas Paradox can be observed, due to inefficient flow of capital. Aim of this study is to
quantify, whether this Lucas paradox is present in EU and how it contributes to convergence or
divergence between countries. Comparison of panel VAR impulse-response functions is used
for evaluation. Results suggests, that Lucas paradox can be identified between Euro area vs
non-Euro area countries and Euro area core vs periphery. Furthermore, capital misallocation
regarding these four groups prevents possible short-term economic convergence.

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