The literature has shown that the implied welfare gains from international financial integration are very small. We revisit the existing findings and document that welfare gains can be substantial if capital goods are not perfect substitutes. We use a model of optimal savings that includes a...

The literature has shown that the implied welfare gains from international financial integration are very small. We revisit the existing findings and document that welfare gains can be substantial if capital goods are not perfect substitutes. We use a model of optimal savings that includes a...

This research develops a unified growth theory that captures the transition from the domination of geographical factors in the determination of productivity in early stages of development to the domination of institutional factors in mature stages of development. It identifies a novel channel...