We study how financial market effciency affects a measure of diversification of output across industrial sectors … and for various levels of disaggregation, we construct a benchmark measure of diversification as the set of allocations of … faster for sectors that have a higher "natural" long-term risk-adjusted growth and which exhibit higher information frictions …

We first study growth and risk sharing in a stochastic growth model with preference shocks and two risk-averse agents …

This paper provides evidence that domestic opportunities to share risk have contributed to slower growth. We first … provide a simple model economy that demonstrates how a country's ability to diversify risk is linked to its growth rate. In … domestic opportunities to diversify risk and growth. We employ two econometric procedures: (1) traditional instrumental …