We estimate a Factor Augmented Vector autoregression (FAVAR) to identify idiosyncratic exchange rate shocks and examine the effects of these shocks on different sectors of the economy. We find that an unexpected shock to the exchange rate has significant effects on the tradable sector of the...

If institutions are designed to create order and reduce uncertainty, poorly-functioning institutions will create `excess' uncertainty. It follows then a reform of such poorly-functioning institutions will only be successful if uncertainty is reduced. This paper, using Bayesian Structural...