A central puzzle in international finance is that real exchange rates are volatile and, in stark contradiction to effcient risk-sharing, negatively correlated with cross-country consumption ratios. This paper shows that incomplete asset markets and a low price elasticity of tradables can account...

The issue of whether government capital is productive has received a great deal of recent attention. Yet, empirical analyses of public capital productivity have been limited to a small sample of countries for which official capital stock estimates are available. Building on a new database that...

In the neoclassical production functions model technical change (TC) is assumed to be exogenous and it is specified as a function of time. However, some exogenous external factors other than time can also affect the rate of TC. In this paper we model TC via a combination of time trend (purely...