This paper analyzes the offshoring of innovative activity, and the circumstances and implications of the global spread of corporate Ramp;D. Economists are largely in agreement on the importance of continued innovation as the primary way to create high-paying new jobs in the US, therefore...

It is now widely recognized that the interest rate risks embedded in the Fannie Mae and Freddie Mac (Famp;F) retained mortgage portfolios create a serious threat to the US financial system. This paper evaluates proposals to control the interest rate risk embedded in these portfolios. The...

This paper evaluates the interest rate risk of Fannie Mae and Freddie Mac (Famp;F) and develops related public policy proposals. Famp;F merit special attention due to (1) their potentially very large interest rate risk, and (2) their status as U.S. government sponsored enterprises. The analysis...

We develop a model for markets for catastrophic risk. The model explains why insurance providers may choose not to offer insurance for catastrophic risks and not to participate in reinsurance markets, even though there is a large enough market capacity to reach full risk sharing through...

In a frictionless market with perfect information, a shareholder-wealth- maximizing firm should force conversion of its convertible bond issue into stock as soon as the bond comes in-the-money. Firms however appear to systematically delay forced conversion, sometimes for years, beyond this time....

This paper provides a framework for analyzing the effects of symmetric and asymmetric changes in information about risk on equilibrium real interest rate spreads across countries. Following the literature on parameter uncertainty, improvements in information are modeled as reductions in...

There is a growing consensus that reform is needed for the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. It is often suggested that the connections between the GSEs and the federal government should be permanently severed and the firms reduced in size so that their...

This paper examines the causes of the failure of the private market for catastrophe insurance and examines some public solutions. Although the standard explanations of insurance market failure (adverse selection and moral hazard, large imprecise risks) are present, we argue that the primary...

This paper presents an empirical analysis of the relation between energy factor markets, leasing structures, and the transaction prices of office buildings in the U.S. We employ a large sample of 15,133 office building transactions between 2001 and 2010. In addition to building characteristics,...

This paper provides a formal model of contingent convertible bonds (CCBs), debt instruments that automatically convert to equity if and when the issuing firm or bank reaches a specified level of financial distress. We develop closed-form solutions for the value of CCBs with market-based...