A literature debates the explanations for the cyclical properties of emerging markets using either trend shocks (Aguiar and Gopinath 2007) or financial frictions (Neumeyer and Perri 2004; Garcia-Cicco, Pancrazi, and Uribe 2010). We state a formal proposition that makes explicit the parametric...

The Great Recession, the Great Depression, and the Japanese slump of the 1990s were all preceded by periods of major technological innovation, which happened about 10 years before the start of the decline in economic activity. In an attempt to understand these facts, we estimate a model with...