In this paper a general equilibrium intertemporal model with optimizing consumers and producers is developed to analyze how temporary terms-of-trade disturbances affect the path of real exchange rates and the current account. Changes in the internal terms of trade (arising from tariff changes)...

The authors uncover a significant negative correlation between various volatility measures and private investment in developing countries, even when adding the standard control variables. No such correlation is uncovered when the investment measure is the sum of private and public investment...

This paper constructs an intertemporal version of a monopolistic competitive framework where producers may diversify internationally. International diversification is shown to induce a positive correlation between the volatility of productivity shocks and investment. In the presence of a...