We find a strong link between currency excess returns and the relative strength of the business cycle. Buying currencies of strong economies and selling currencies of weak economies generates high returns both in the cross section and time series of countries. These returns stem primarily from...

This paper provides a methodological contribution to the empirical literature on stochastic economic growth. The augmented Solow-Swan model with stochastic capital accumulation rates and labor force growth implies that the steady-state labor productivity level towards which an economy converges...