Inspired by the recent literature on aggregation theory, this paper introduces HITS, a semiparametric model of consumer demand that allows for diversity in tastes. The strong variation of budget shares observed aacross income strata can arise from two economic factors: the individual income...

The widely held view that there is essentially no correlation between a firm's performance and the compensation of the firm's CEO calls into question an important component of effective corporate governance. Using a new 15-year panel data set of CEOs in large US firms, we find that total CEO...

We introduce a new, integrated regression-based approach for decomposing inequality indices with household-level data, and we examine the strengths and weaknesses of inequality decompositions by income source in light of the way that they are commonly interpreted. The approach uses estimated...

Using a sample of Harvard undergraduates, the authors analyze the trust and social capital in two experiments. Trusting behavior and trustworthiness rise with social connectionl differences in race and nationality reduce the level of trusworthiness.

Interest rate expectations are essential to exchange rate determination. Using a unique survey data set on interest rates forecasts from 1986 to 1995 for G7 countries, we find that there were more persistent interest rate shocks in sample than there were expected by the market.

Stock prices move together more in low-income economies than in high-income economies. This finding is clearly not due to market size differences, and only partially explained by slightly higher fundamentals correlation in low-income economies. However, measures of a country's institutionalized...

This paper proposes an alternative to the traditional model for explaining the spread between taxable and tax-exempt bond yields. This alternative model is a special case of a general class of cliente models of portfolio choice and asset-market equilibrium.

The remarkable turnaround of the Mexican economy and the evolution of the banking problem is of interest in its own right. In addition, it is of interest to policy makers in other countries where debt-servicing difficulties and foreign exchange crisis have forced adjustment measures. In this...

In the last fifteen years or so, lawyers working in law and economics and economists with an interest in legal matters have turned their attention to the topic of bankruptcy. A large amount of work has resulted, both theoretical and empirical, some of which has been concerned with the...

We present a model of the effects of legal protection of minority shareholders and of cash flow ownership by a controlling shareholder on the valuation of firms. We then test this model using a sample of 371 large firms from 27 wealthy economies. Consistent with the model, we find evidence of...