We study the effect of variation in interest rates on investment spending, employing a large panel data set that links yields on outstanding corporate bonds to the issuer income and balance sheet statements. The bond price data—based on trades in the secondary market—enable us to construct a...

This paper offers an ambiguity-based interpretation of variance premium - the differ- ence between risk-neutral and objective expectations of market return variance - as a com- pounding effect of both belief distortion and variance differential regarding the uncertain economic regimes. Our...

We consider a neoclassical interpretation of Germany and Japan’s rapid postwar growth that relies on a catch-up mechanism through capital accumulation where technology is embodied in new capital goods. Using a putty-clay model of production and investment, we are able to capture many of the...

We examine the evolution of the demand for skilled workers relative to unskilled workers in the Chilean manufacturing sector following Chile’s liberalization of trade in the late 1970’s. Following such trade reforms, the standard Heckscher-Olin model predicts that a low labor-cost country...

We examine the evolution of the demand for skilled workers relative to unskilled workers in the Chilean manufacturing sector following Chile’s liberalization of trade in the late 1970’s. Following such trade reforms, the standard Heckscher-Olin model predicts that a low labor-cost country...

Without capital market imperfections, the capital structure of a firm, including the size, the maturity and the currency composition of debts, should not matter for investment decisions. The Asian financial crises provide a good opportunity to test this hypothesis. We approach the problem in two...