In spite of concerns about "twin deficits" (fiscal and the current account deficits) for the United States economy, empirical evidence suggests that "twin divergence" is a more usual feature of the historical data, i.e., when fiscal accounts worsen, the current account improves and vice versa....

This paper investigates the economic and political conditions that are associated to the occurrence of a sovereign debt crisis. We use a new statistical approach (Classification and Regression Tree) that allows us to derive a collection of "rules of thumb" that help identify the typical...

We revisit the classic transfer problem, accounting for two channels of adjustment: increased trade in existing goods and services (the intensive margin) and net creation and destruction of product varieties (the extensive margin). Over the medium term, the latter reduces the scope for real...