We consider one polluting industry in an open economy. The national government implements a policy of industrial pollution control by inducing appropriate technological innovations to reduce toxic emissions. The emission-reducing innovations are developed through firm-specific costly...

Anti-trust problems affecting markets for intermediate goods or services raise the input costs of firms operating in downstream sectors, which often face tough international competition. Such firms lose market share, thus worsening the economic performance of the country. We try to document the...

The paper presents new stylized facts on the direction of capital flows. We find (i) international capital flows net of government debt and/or official aid are positively correlated with growth; (ii) sovereign debt flows are negatively correlated with growth only if debt is financed by another...

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...

In this paper I review the contribution of real business cycles models to our understanding of economic fluctuations, and discuss open issues in business cycle research.