This paper reviews three important issues in the literature on international and intranational risk sharing. First, we establish a comprehensive se t of stylized facts for consumption risk sharing within and across countries. Consistent with the findings in the literature, we find that the...

Milton Friedman (1977) proposed that there is a positive relationship between inflation and inflation uncertainty. Using state-dependent models of conditional moments, the authors find strong statistical evidence that higher levels of inflation are less predictable, although innovations in...

Previous research has shown that trust is an important component that encourages investment and capital formation which, in turn, enhances economic performance. This article investigates the effect of terrorism on income, including its indirect role through lowering trust. We consider terrorism...

Since the extensive work by Burns and Mitchell, many economists have interpreted economic fluctuations in terms of business-cycle phases. Given this, the authors argue that, in addition to usual model-selection criteria currently used in the profession, the adequacy of a univariate macroeconomic...

This paper surveys and analyzes the international real business cycle literature. We re-explore two international business cycle anomalies emphasized by Backus, Kehoe and Kydland (1995) as well as establishing the pattern of productivity growth between industries and countries. We then compare...

A popular theory of optimal tax policies suggests that tax rates should follow a random walk. This paper extends the existing empirical literature in three ways. First, the impact on the marginal utility of consumption when the government chooses a tax plan to smooth the distorting impact of...

The frequency of foreign conflict initiations in the United States is found to be significantly greater following the onset of recessions during a president's first term than in other periods. The authors develop an economic theory of the political use of wars which links the election cycle, war...

This paper investigates the character of business cycles across large and small economies. Empirically, G-7 countries have less volatile investment, consumption, and trade balance ratios, higher correlations between domestic saving and investment rates, and about the same correlation of the...