uncertainty --- suppresses investments. OPU may cause financial distress through mechanisms of credit crunch, firm volatility and …

average higher volatility of output growth (1) accumulated higher external assets in the long-run and (2) experienced more … higher uncertainty of the income stream increases the precautionary savings motive of households. They have a desire to save … and a precautionary savings motive will lead to procyclical capital outflows at business cycle frequency and a higher long …