This paper integrates the decision making of a firm facing production uncertainty into the theory of aggregate supply. This integration has two important policy implications. First, if the aggregate demand is not unitary price elastic, the presence of uncertainty reduces the aggregate supply,...

This paper investigates the deindustrialization and welfare effects of infrastructure aid in developing countries. In the short run, cost-saving infrastructure aid in the export sector increases the domestic wage rate, whereas the same aid in the import sector lowers it. The cost of nontraded...