Rents generated by long-lasting government policies may be capitalized as assets. With life-cycle saving behavior, these rents raise international indebtedness. Shifts in policy that affect their capitalized value generate correlated movements in the current account and the real exchange rate....

We model the invention of new technologies and their diffusion across countries. In our model all countries grow at the same steady-state rate, with each country's productivity ranking determined by how rapidly it adopts ideas. Research effort is determined by how much ideas earn at home and...