Potent ingredients : understanding uncertainty, volatility and macroeconomic performance

Abstract

This thesis comprises of three related essays in international financial macroeconomics. The research centers on the relation between the volatility of interest rates at which small open economies borrow internationally and the dynamics of macroeconomic variables. So, the thesis is mainly concerned with the relation between second order moments in finance and first order moments in macroeconomics. The research is predominantly empirical and quantitative with some contributions to the computational literature.