Volatility and the Gains from Trade

We thank Costas Arkolakis, Kyle Bagwell, Dave Donaldson, Jonathan Eaton, Marcel Fafchamps, Pablo Fajgelbaum, Chang-Tai Hsieh, Sam Kortum, Yu-Jhih Luo, Rocco Machiavello, Kiminori Matsuyama, John McLaren, Nina Pavcnik, Steve Redding, Andres Rodriguez-Clare, Esteban Rossi-Hansberg, Andy Skrzypacz, Bob Staiger, Jon Vogel and seminar participants at Columbia University, Dartmouth College, George Washington University, Harvard University, University of Maryland, the NBER ITI Winter Meetings, Pennsylvania State University, Princeton University, Princeton IES Summer Workshop, Purdue University, Stanford University, University of British Columbia, University of California - Berkeley, University of California - Davis, University of North Carolina, University of Toronto, and University of Virginia. We thank Scott Fulford for kindly providing the rural bank data we use. Rodrigo Adao, Fatima Aqeel, Masao Fukui, Annekatrin Lüdecke, Daniel O'Connor, Saptarshi Majumdar, and Yuta Takahashi provided exceptional research assistance. Part of this paper was completed while Allen was a visitor at the Stanford Institute for Economic Policy Research (SIEPR), whose hospitality he gratefully acknowledges. This material is based upon work supported by the National Science Foundation under grant SES-1658838. All errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

• May 19, 2016