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"A defining feature of business cycles is the comovement of inputs at the sectoral level with aggregate activity. Standard models cannot account for this phenomenon. This paper develops and estimates a two-sector dynamic general equilibrium model which can account for this key regularity. My...
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We use cross-country data and instrumental variables widely used in the literature to show that (i) institutions (such … countries have entirely different determinants for income levels. In particular, geography, rather than institutions, explains … the income differences among agrarian countries, while institutions appear to matter only for income variations in …
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