In this paper we test the well-known hypothesis of Obstfeld and Rogoff (2000) that tradecosts are the key to explaining the so-called Feldstein-Horioka puzzle. Using a gravityframework in an intertemporal context, we provide strong support for the hypothesis and wereconcile our results with the...

Official adjustments of the budget balance to the cycle merely assume that the only category of governmentspending that responds automatically to the cycle is unemployment compensation. But estimatesshow otherwise. Payments for pensions, health, subsistence, invalidity, childcare and subsidiesof...

The paper is devoted to an econometric analysis of learning foreign languages in all parts of the world. Our sample covers 193 countries and 13 important languages. Four factors significantly explain learning. All four affect the broad decision to learn but the last two also point to the choice...

Financial services with global reach are becoming ever more important in the conduct and organization of the trade and investment of nations, and currencies that lack international standing lose out in this business. The result of financial development has been destabilizing currency and...

Official calculations of automatic stabilizers are seriously flawed since they rest on the assumption that the only element of social spending that reacts automatically to the cycle is unemployment compensation. This puts into question many estimates of discretionary fiscal policy. In response,...