. We propose a theory in which differences in preferences, productivity, and risk exposure generate gains from trade, but … production. Along with an increase in valuations, the model can generate a joint decline in investment, productivity, risk …

investment in irreversible goods. This paper characterizes this problem in general equilibrium with technology shocks, additive … output shocks and shocks to the marginal efficiency of investment. Uncertainty is associated with the variance of these … random variables, and irreversibility is introduced by a non-negativity constraint on investment. I find that irreversibility …