Uncertainty, Asymmetric Information, and Hidden Action
Explain why the three crucial institutional conditions—verifiability of states of nature, the enforceability of contractual stipulations, and the prevention of hidden actions—are tantamount for the idea that "the case for free international capital markets is the same as the case for free trade but for the subscripts."
Explain why under these three institutional conditions the diversification of country risk under uncertainty provides another source of
gains from intertemporal trade.