The overwhelming importance of multinational activities as well as the coexistence of exporters and multinationals within the developed countries demand for theoretical models which provide a convincing explanation of simultaneous two-way trade and horizontal multinational activities. We present...

This paper compares four different estimators with respect to their suitability for cross-section gravity model estimation. In many circumstances, a Hausman-Taylor approach can be recommended. This framework may provide consistent parameter estimates, when OLS or the traditional random-effects...

This paper provides theory and firm-level evidence on the incorporation decision of entrepreneurs in a model of corporate governance and taxation. The theory explains how the incorporation decision of entrepreneurs is driven by taxation (corporate and personal income taxes), corporate...

This paper prooses a generalized panel data model with random effects and first-order spatially autocorrelated residuals that encompasses two previously suggested specifications. The first one is described in Anselin's (1988) book and the second one by Kapoor, Kelejian, and Prucha (2007). Our...

Recent research on trade and multinationals highlights a novel issue with multinational firms. In particular, their integration strategies are complex and the degree of vertical integration varies in a multilateral world with many possible locations of activity. Multinationals may choose some...

The recent general equilibrium theory of trade and multinationals emphasizes the importance of third countries and the complex integration strtegies of multinationals. Little has been done to test this theory empirically. This paper attempts to rectify this situation by considering not only...

This paper introduces a new rationale for the existence of “Directors’ and Officers’” (D&O) insurance. We use a model with volatile stock markets where shareholders design compensation schemes that incentivize managers to stimulate short-term increases in stock prices that do not...

One of the oldest and largest literatures in empirical economics is concerned with the estimation of demand and supply of goods, services, and factors across national or subnational borders (see Leamer and Levinsohn, 1995). The respective empirical models specified and estimated are often...

The analysis of bilateral trade flows features prominently in empirical research in international economics. Various different international statistical sources are available for researchers and commonly used. Unfortunately, the data happen to differ quite substantially across the different...