Theoretical studies have shown that under unorthodox assumptions on preferences and production technologies, collateral constraints can act as a powerful amplification and propagation mechanism of exogenous shocks. We investigate whether or not this result holds under more standard assumptions. We find that collateral constraints typically generate small output amplification. Large amplification is obtained as a "knife-edge" type of result.

A large body of empirical research indicates that countries with low policy-induced trade barriers tend to enjoy rapid growth, ceteris paribus. In contrast, alternative theoretical models suggest that the relationship between trade barriers and growth may be contingent on the level of development. Employing a direct trade-barrier measure-ad valorem tariff rates-we find evidence of such a contingency: the marginal effect of tariffs on growth is declining in the level of per capita income. Moreover, evidence of a negative relationship between tariffs and growth is apparent only among the world's rich countries. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

In the context of a simple asset-pricing environment, we study the ability of self-control preferences to account for the stock-price volatility, risk-free-rate and equity-premium puzzles. Using a full-information estimation procedure, we estimate the presence of a quantitatively small selfcontrol e¤ect in the data. Moreover, with results obtained using CRRA preferences serving as a benchmark, we …nd that the adoption of self-control preferences makes only a marginal contribution towards a resolution of these puzzles.

We show that state non-separable preferences à la Epstein-Zin-Weil (EZW) provide a tractable and ‡exible framework to study the economics of health and longevity. This utility representation: (i) admits a preference for timing of resolution of uncertainty regarding mortality risks; (ii) links the marginal valuation of survival to the level of survival; (iii) can preserve homotheticity even for low degrees of intertemporal substitution without generating implausible predictions regarding the value of life; and (iv) adds needed ‡exibility to account for the empirical evidence on the value of life. We illustrate the implications of EZW preferences for the economic value of observed di¤erences in life expectancy across countries and over time, and for the value of life over the life cycle.