We examine the effect of non-zero, long-run foreign asset positions on consumption dynamics in response to productivity shocks in a two-country, dynamic, general equilibrium model, with different discount factors across countries populated by overlapping generations of households. We then...

We examine the effect of non-zero, steady-state foreign assets on consumption dynamics in response to productivity shocks in a two-country, dynamic, general equilibrium model. The model generates non-zero steady-state net foreign assets by allowing for different discount factors across...

This paper extends the analytical framework provided by Glick and Rogoff (1995. Journal of Monetary Economics 35, 159-192) to an economy with traded and nontraded goods, and it analyzes the impact of country-specific and global productivity shocks on the current account and investment. Each of...

A commonly held view is that a small open economy adjusts to a negative external shock by switching both expenditure and resources toward the domestic traded goods sector. We show that, when both labor and imported inputs are used as factors of production, the average labor intensity in the...

Review of Explaining Growth: A Global Research Perspective, edited by Gary McMahon and Lyn Squire; and Productivity Growth, Inflation, and Unemployment: The Collected Essays of Robert J. Gordon by Robert J. Gordon

In recent years there has been a revival of interest in the trade-growth nexus. A number of authors have suggested that regional economic integration and liberalization of international trade are likely to have positive effects not only on productivity levels but also on long-term productivity...

One of the costs of high levels of inflation may be misperceptions of relative prices and excessive volatility in sectoral output. This paper, therefore, examines the relationship between the level of inflation and sectoral output growth variability in Canada from 1961:1 to 1995:4. Despite the...