Cross-Regime Tests of the Lucas Supply Function in Developing Countries

32 Pages Posted: 15 Feb 2006

See all articles by Peter J. Montiel

Peter J. Montiel

Williams College - Department of Economics

Iqbal Zaidi

affiliation not provided to SSRN

Date Written: April 20, 1987

Abstract

The paper assesses the empirical relevance of the Lucas supply function for developing countries. The prediction of Lucas` model that the short-run effects of monetary disturbances on real output are negatively related to the variability of such disturbances is tested for a large sample of developing countries using distribution-free statistical methods. The negative relationship seems to be a robust feature of developing country data, and holds true for almost all of the analytical subgroups examined.

JEL Classification: 1331, 1210

Suggested Citation

Montiel, Peter J. and Zaidi, Iqbal, Cross-Regime Tests of the Lucas Supply Function in Developing Countries (April 20, 1987). IMF Working Paper No. 87/28, Available at SSRN: https://ssrn.com/abstract=884687

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Iqbal Zaidi

affiliation not provided to SSRN

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