We analyze the foundations of the relationship between trade and average productivity in the Ricardian model. Under broad assumptions about the autarky distributions of industry productivities, trade openness raises average productivity. This is due to the selection effect of international...

This Paper develops a test of contagion in financial markets based on bivariate correlation analysis, which generalizes existing tests, and applies it to the international effects of the Hong Kong stock market crisis of October 1997. Contagion is defined as a structural break in the...

How does uncertainty about fundamentals affect speculation in the foreign exchange markets? This paper studies empirically the role of uncertainty in currency crises. Uncertainty, which is measured using the dispersion of survey forecasts of key macroeconomic variables, is found to have a...