In Trading & Exchanges: Market Microstructure for Practitioners, SEC Chief Economist Larry Harris has written a must-read for anyone interested in the good, the bad, and the ugly of securities trading.

Examines the New View of yield spreads between taxable and tax-exempt bonds, which argues that personal income taxes are irrelevant to the relationship between interest rates on tax-exempt and taxable bonds. Finds evidence that the implicit tax rate, adjusted for quality differences, is related...

A New View of tax exemp-tion rejects the Traditional View that tax exemption gives a capital cost subsidy measured by the difference between taxable and tax-exempt interest rates. This paper develops a decisive voter model in which the New View is a special case. It considers the effects of...

In 1973, Myron Scholes and the late Fischer Black published their seminal paper on option pricing. The Black-Scholes model revolutionized financial economics in several ways: It contributed to our understanding of a wide range of contracts with option-like features, and it allowed us to revise...