The influential work of Ramey and Ramey (1995) highlighted an empirical relationship that has now come to be regarded as conventional wisdom - that output volatility and growth are negatively correlated. We reexamine this relationship in the context of globalization - a term typically used to...

We show that the when one takes into account the global equilibrium ramifications of an unwinding of the US current account deficit, currently running at nearly 6% of GDP, the potential collapse of the dollar becomes considerably larger (more than 50% larger) than our previous estimates...