Colacito, Riccardo; Croce, Mariano M. - In: American Economic Review 102 (2012) 3, pp. 152-55
We characterize the equilibrium of a two-country, two-good economy in which agents have opposite preference bias toward one of the two consumption goods and fear model misspecification. We document that disagreement about endowments' growth prospects is a persistent endogenous outcome of this...