We explain the currency carry trade performance using an asset pricing model in which factor loadings are regime-dependent rather than constant. Empirical results show that a typical carry trade strategy has much higher exposure to the stock market and is mean-reverting in regimes of high FX...

This paper suggests and tests a simple stochastic growth model with international technological links, where growth could be driven either by exogenous or endogenous accumulation of technological knowledge. The main prediction of the model is that per capita output in different countries are...