This paper analyzes the impact of different types of barriers on the decision to invest using a simple framework based on stochastic discount factors. Our intuitive approach proposes an alternative to the real options methodology that does not rely on the “smooth-pasting condition.” An...

We note the empirical regularity that market liberalizations cause an initial fall in output, efficiency and value-added. We account for these findings in a model where liberalizations increase systemic risk. We compare it to alternative explanations and discuss implications.

Tropical forests are estimated to release approximately 1.7 PgC per year as a result of deforestation. Avoiding tropical deforestation could potentially play a significant role in carbon mitigation over the next 50 years if not longer. Many policymakers and negotiators are skeptical of our...

Recent empirical results about the US term structure are difficult to reconcile with the classical hypothesis of rational expectations even if time-varying but stationary term premia are allowed for. A hypothesis of rational learning about the conditional variance of the log pricing kernel is...