Luo, Yulei; Nie, Jun; Young, Eric R. - In: European Economic Review 67 (2014) C, pp. 1-27
In this paper we examine the effects of model misspecification (robustness or RB) on international consumption correlations in an otherwise standard small open economy model with endogenous capital accumulation. We show that in the presence of capital mobility in financial markets, RB lowers the...