is given to the source. Macroeconomic Volatility and External Imbalances

Bianchi, Daniele Siena and Cedric Tille for insightful discussions, and to seminar participants at several institutions and conferences for helpful comments. We also thank the European research Council for financial support under Grant 313671- RESOCONBUCY. Data and codes used in this paper are available on the authors ' websites. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis, the Federal Reserve System, or the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications