This paper provides a theory of financial frictions as a transmission mechanism for news shocks to drive aggregate TFP fluctuations. We show that in an economy calibrated to U.S. data, variations in financial frictions on capital allocation in response to news about future technology can...

Low frequency changes in the U.S. current account can be understood in terms of the influence of differences in productivity growth rates across time and across countries using standard growth theory. In particular, the secular decline is primarily driven by the increase in the U.S. TFP growth...