We apply Marginal Conditional Stochastic Dominance (MCSD) tests to returns on sentiment beta sorted portfolios and sentiment-arbitrage portfolios, constructed using the Baker and Wurgler (2007) index of sentiment levels. The theory of MCSD demonstrates that, if one (mutually exclusive) subset of...

Using data from the National Survey on Drug Use and Health, evidence of income inferiority in illegal drug consumption is presented. This is done by estimation of binary choice probit models with endogenous regressors. The simultaneity issue between drug consumption and income has been addressed...

Shleifer and Treisman (2005) argue that Russia is a “normal country.” Their benchmark for normalcy, however, refers primarily to middle-income countries like Mexico and Argentina. We propose that a more meaningful benchmark is the experience of other post-socialist transition countries,...

We use a version of the Meade model to consider the effects of interdependent import tariffs in the presence illegal immigration. First, we consider the small union case and derive the Nash tariff equilibrium for two potential members of a Preferential Trade Agreement (PTA). We analyze...

Following Barzel (1976), product quality increases in response to unit taxation but remains unchanged by ad valorem taxation. While many tax theorists agree this argument is theoretically sound, empirical support of Barzel’s theory is limited to the cigarette market. This paper tests and...

Saving traditional small ‘mom and pop’ businesses has been a justification for political and court decisions preventing Wal-Mart from opening new stores virtually everywhere across the United States. We present the first rigorous econometric investigation of how Wal-Mart actually impacts the...

This paper examines the impact of economic freedom on income inequality using cross-sectional data for U.S. states. While previous research has explored this relationship internationally, the results have been conflicting. In addition, while it seems obvious that the large institutional...

This paper augments the existing literature on trade and child labor by exploring the effects of terms of trade changes in the context of a three good general equilibrium model, where one of the goods is a non-traded good. We find that under quasi-linear preferences the effect of the terms of...

Conditions are derived for linear-quadratic control (LQC) problems to exhibit linear evolution of the Riccati matrix and constancy of the control feedback matrix. One of these conditions involves a matrix upon whose rank a necessary condition and a sufficient condition for controllability are...

We complement the existing literature on corruption and trade policy by providing new estimates of the effects of corruption (and institutions) on trade protection. We control for unobserved heterogeneity among countries with properly specified fixed effects, exploiting the time dimension...