This paper examines the evidence for the common assertion that the volatility of emerging stock markets has increased … volatility in recent years; indeed, it appears that volatility may have tended to fall rather than rise on average. The paper … should lead to a reduction in return volatility as risk is spread among a larger number of investors …

The literature on leverage until now shows how an increase in volatility reduces leverage. However, in order to explain … pro-cyclical leverage it assumes that bad news increases volatility. This paper suggests a reason why bad news is more … often than not associated with higher future volatility. We show that, in a model with endogenous leverage and heterogeneous …

predictions of the theory …

-or-sow"" model of growth. High volatility of permanent shocks results in high precautionary saving in the safe asset and low … investment, or a ""volatility trap."" Namely, big savers invest relatively little. In contrast, low volatility of permanent … shocks leads to low precautionary saving and high or low investment, depending on the volatility of temporary shocks …

This paper assesses the role of trade patterns in shaping the volatility of the effective exchange rate under two …

rate risk in the market (i.e. high volatility). Market impairment or overshoot of exchange rate between two equilibria … could generate high volatility and threaten financial stability due to unhedged exposure to exchange rate risk in the … than other rules, such as fixed-volatility rules. The empirical methodology is backtested on Banco Mexico's FXIs data …