Working Papers

This paper develops a multi-agent dynamic model of the commercial aircraft industry and then uses that model to analyze industry pricing, performance, and optimal industry policy. In the model, firms are differentiated in their products and cost…

Most theories of the firm ignore the entrepreneurial process of how the various resources of the firm are combined in the first place. This paper examines the process of how an entrepreneur obtains commitments from multiple resource providers to…

This paper considers potential disagreements between an entrepreneur and a venture capitalist about the desirability of taking a company public. Convertible securities are shown to be optimal for a novel reason. In particular, it is shown that…

While public benefits of environmentally friendly practices are well understood, there is anecdotal evidence that suggests that firms that follow such practices also receive private benefits. The paper investigates the effect of pollution…

When countries attempt to stabilize annual inflation rates greater than 40 percent, the domestic stock market appreciates by 24 percent on average. Therefore, the long-run growth benefit of reducing high inflation outweighs the short-run cost. In…

This .paper investigates the linkages between trade policy and economic growth in a panel of 57 countries, between 1970 and 1989. We develop a new measure of trade policy openness, based on the policy component of trade shares. This is used in a…

We examine whether pollution prevention actions result in innovation. Since a change in the product or process is not instantaneous, we compute the buy and hold returns for the long run to capture the gains due to innovation. We compare the stock…

Corporations simultaneously claim that human capital is increasingly important to their success and that they seek to maximize shareholder value. This paper studies the relationship between these two developments. We show that the pursuit of…

This paper, studies the evolution of sectoral labor concentration in relation to the level of per capita income. We show that various measures of sectoral concentration follow a U-shaped pattern across a wide variety of data sources: countries…

We study the behavior of prices in Poland following the big-bang market reforms in 1990, using a large, disaggregated data set. Price differences within and across regions are initially large but fall rapidly in the early stages of transition.…

Why does venture capital work in some countries but not in others? This clinical study of the first German venture capital firm examines the difficulties of creating a venture capital market in a bank-based financial system. The analysis…

This paper examines the impact of trade liberalization episodes on movements of labor across sectors. The aim is to evaluate the empirical support for two classes of models: those where the effects of trade are mediated by structural change, and…

This paper examines empirical evidence on the impact that venture capitalists have on the development path of new firms. We use a hand-collected data set on Silicon Valley start-up companies that allows us to “look inside the black box” and…

Stock market liberalizations lead private investment booms. In a sample of 11 developing countries that liberalized, 9 experience growth rates of private investment above their non-liberalization median in te first year after liberalizing. In the…

Over the last three decades, there has been a substantial shift in financial market policy towards the promotion of financial liberalization. Policy makers around the globe have been preoccupied with deregulating interest rates, lifting…

Firms routinely rely on other firms’ goodwill. Where a well-functioning legal system exists, in advanced economies, ongoing relationships complement formal contracts in helping deals work smoothly [Macaulay 1963; Haley 1997]. Where laws of…

This paper studies commercial aircraft production, with an emphasis on the dynamics of production technology. Because commercial production is subject to many uncertainties not present in military production, the data presented here allows…

We study the evolution of prices in a symmetric duopoly where firms are uncertain about the degree of product differentiation. Customers sometimes perceive the products as close substitutes, sometimes as highly differentiated. Firms learn about…

Is investment constrained more by insecure property rights or by limited external finance? For five transition economies in Eastern Europe and the former Soviet Union we find that weak property rights limit the reinvestment of profits in startup…

A stock market liberalization is a decision by a countrys government to allow foreigners to purchase shares in that countrys stock market. On average, a countrys aggregate equity price index experiences abnormal returns of 3.3 percent per month…