The empirical relationship between the average growth rate and the volatility of growth rates, both over time and across countries, has important policy implications, which depend critically on the sign of the relationship. Following Ramey and Ramey (1995), a wide consensus has been building...

The empirical relationship between the average growth rate and volatility of growth rates, both over time and across countries, has important policy implications, which depend critically on the sign of the relationship. Following Ramey and Ramey (1995) a wide consensus has been building that, in...

We characterize the equilibrium for a small economy in a dynamic Heckscher-Ohlin model with uncertainty. We show that when trade is balanced period-by-period, the per capita output and consumption of a small open economy converge to an invariant distribution that is independent of the initial...

There is a growing literature that studies the properties of models that combine international trade and neoclassical growth theory, but mostly in a deterministic setting. In this paper we introduce uncertainty in a dynamic Heckscher-Ohlin model and characterize the equilibrium of a small open...

There is a growing literature that studies the properties of models that combine international trade and neoclassical growth theory, but mostly in a deterministic setting. In this paper we introduce uncertainty in a dynamic Heckscher–Ohlin model and characterize the equilibrium of a small open...

We study the volatility of growth rates and find that it differs systematically across countries. Our empirical investigation reveals that there is a high correlation between disparity in political regimes across countries and differences in volatility. This is not the case for some of the...

In the context of the classical stochastic growth model, we provide a simple proof that the optimal capital sequence is strictly bounded away from zero whenever the initial capital is strictly positive. We assume that the utility function is bounded below and the shocks affecting output are...