methodology exploits the information in consumption and net exports to identify the persistence of productivity. We find that …

of markets once we appropriately model the decomposition of underlying productivity shocks into permanent and transitory …

the shock compared to countries which did not have such preemptive policies in place. We use the episodes of Taper Tantrum … effects where preemptive policies are ex-ante by construction and cannot be put in place as a response to the shock ex …

fiscal policy available exacerbates the economic cycle by distorting investment during recessions. We characterize the … mechanism through which limited commitment generates cycles in investment in an environment where under commitment investment … would be constant. We extend our results to standard productivity shocks and to the case where the government has access to …