Working Papers

When Less Developed Countries (LDCs) announce debt relief agreements under the Brady Plan, their stock markets appreciate by an average of 60 percent in real dollar terms, a $42 billion increase in shareholder value. In contrast, there is no…

The use of modern microeconomics in policy is illustrated by the markets for spectrum, electricity, greenhouse-gas reductions, defense procurement, and Treasury bills. Further examples are antitrust divestiture rules, market-based redistribution…

We develop a model in which firms set their salary levels before matching with workers. Wages fall relative to any competitive equilibrium while profits rise almost as much, implying little inefficiency. Furthermore, the best firms gain the most…

This chapter explains the logic of structural econometric models and compares them to other types of econometric models. We provide a framework researchers can use to develop and evaluate structural econometric models. This framework pays…

Paragraph IV of the Hatch-Waxman Act provides a mechanism for the litigation of pharmaceutical patent infringement disputes. Many of these cases have been settled with reverse payments by the brand to the generic in return for delayed generic…

Debt relief is unlikely to stimulate investment and growth in the nations being considered for debt relief under the highly indebted poor countries (HIPCs) initiative. This is because the HIPCs do not suffer from debt overhang. The principal…

This paper revisits the empirical evidence on the relationship between economic integration and economic growth. First, we present an updated dataset of openness indicators and trade liberalization dates for a wide cross-section of countries in…

Much of the recent growth and development literature is based on the notion that economies may exhibit multiple equilibria. An economy may get stuck in a vicious circle of poverty as a result of a coordination failure. Little attention has been…

This paper presents a framework to understand and measure the effects of political borders on economic growth and per capita income levels. We present a model providing a theoretical foundation to estimate empirically the effects of political…

In the year that capital-poor countries open their stock markets to foreign investors, the growth rate of their typical firms capital stock exceeds its pre-liberalization mean by 4.1 percentage points. In each of the next three years the average…

We provide new measures of ethnic, linguistic and religious fractionalization for about 190 countries. These measures are more comprehensive than those previously used in the economics literature and we compare our new variables with those…

Recent efforts to restructure electricity markets have renewed interest in assessing how consumers respond to price changes. This paper develops a model for evaluating the effects of alternative tariff designs on residential electricity use. The…

This paper provides a new explanation for the use of convertible securities in venture capital, which is based on the trade-off between acquisition or IPOs. A key property of convertible preferred equity is that it allocates different cash flow…

This paper examines the position of India in the world trading system. It considers three separate questions: Firstly, how integrated is India in the world trade? Secondly, what gains could India reap from further trade liberalization? Thirdly,…

This paper exploits nationalistic biases in Olympic winter sport judging to study the problem of designing a decision making process that uses the input of potentially biased agents. Judges score athletes from their own countries higher than…

When countries liberalize their stock markets, firms that become eligible for purchase by foreigners (investible), experience an average stock price revaluation of 15.1 percent. Since the covariance of the mean investible firms stock return with…

The merger of British Petroleum and Atlantic Richfield as proposed would have made BP the sole operator and 70 percent owner of Alaska’s oil fields. The Federal Trade Commission challenged the merger partly out of concern for higher West Coast…

We study a one-sided offers bargaining game in which the buyer has private information about the value of the object and the seller has private information about his beliefs about the buyer. We show that this uncertainty about uncertainties…

As is becoming increasingly widely known, mutual funds often calculate their net asset values using stale prices, which causes their daily returns to be predictable. By trading on this predictability, investors can earn 35-70 percent per year in…

This paper investigates the individual and joint effects of group incentive pay and problem-solving teams on productivity. To estimate models of adoption of these work practices and models of the effects of the work practices on productivity, we…