Showing papers by "Robert E. Lucas published in 1990"

Why doesn't capital flow from rich to poor countries?

Abstract: A rotary spinning ring construction is provided wherein the rotary ring body is provided with upper and lower outwardly tapered body portions, each of which has its surface provided with inclined grooves, a ring holder for receiving the rotary body therein, a sliding flange positioned between the holder and the body and having some play therein, and dust caps mounted on the upper and lower portions of the rotary body to seal the upper and lower areas of play between the holder and the rotary body. This arrangement results in a spinning ring construction that will dust automatically.

[World Real Interest Rates]: Comment

Abstract: magnitude of the responses should also be equal. The authors' reject the hypothesis of equality but find the rejection reflects significant differences for only two of the nine countries. The integration hypothesis does less well in the case of investment. The coefficients on world and country stock returns are about equal and half the magnitude of world returns in the world rate equation. World money, lagged world investment and real rates are all insignificant. Tested jointly, world variables are insignificant; yet all three countryspecific variables are highly significant. The authors are puzzled by the importance of own-country monetary expansion given the world rate is insignificant and own money has the wrong sign in the rate equation. One possible explanation is that investment shocks, with resultant increases in the country's income, are partially accommodated by the monetary authority. The significant, and \"wrong\" signed coefficient on own money in the rate equation could be similarly explained; since own investment does not appear to affect interest rates the shocks to income would have to be from another source. In some respects the paper is quite successful. The authors have clearly identified important comovements of real rates, investment, stock returns, and oil prices during this 30-year period. Furthermore, they have shown that salient features of economic performance during this period are worldwide, and that some phenomena are best explained from a world perspective. The results, however, do not give strong confirmation of the model. As the authors suggest, there is room to interpret the coefficients on the two major \"exogenous\" variables-stock prices and the relative price of oil-in alternative ways. Their work does add to the evidence that the movements of the stock market are intimately connected with investment and real rates-further whetting the profession's appetite for a satisfying explanation of the market's own behavior. The authors promise to continue working in this fruitful area and I look with anticipation to reading their future work.