Recent empirical evidence has highlighted how the export patterns of multi-product firms dominate world trade flows, and how these multi-product firms respond to different economic conditions across export markets by varying the number of products they export. In this paper, we further analyze...

Experimental evidence suggests that people tend to be overconfident in the sense that they overestimate the accuracy of their private information, judgment and intuition. In this paper we present a novel evolutionary foundation for overconfidence: diversification of risk. In addition, the model...

We present a standard model of financial innovation, in which intermediaries engineer securities with cash flows that investors seek, but modify two assumptions. First, investors (and possibly intermediaries) neglect certain unlikely risks. Second, investors demand securities with safe cash...

All of these conclusions support the notion that issues of federalism are best left to the national political process. Given the complex interrelationship of federal tax, spending, and regulatory policies, it is impossible for federal courts, bound by the narrow constraints of party-defined...

Information problems and lack of collateral value should make R&D more susceptible to financing frictions than other investments, yet existing evidence on whether financing constraints limit R&D is decidedly mixed, particularly in studies of non-U.S. firms. We study a large sample of European...

In the mid-1990s, mortgage bankers created Mortgage Electronic Registration Systems, Inc. (MERS) to escape the costs associated with recording mortgage transfers. To accomplish this, lenders permanently list MERS as the mortgagee of record instead of themselves to avoid the expense of recording...

Effective domestic policies are urgently needed to address climate change. A great deal of energy is devoted to selecting and designing the optimal policy instruments, with questions of environmental effectiveness and economic efficiency dominating the debate. However, it is equally important to...

We study the welfare effect of tax-optimizing portfolio decisions in a life cycle model with unspanned labor income and realization-based capital gain taxation. For realistic parameterizations of our model, certainty equivalent welfare gains from fully tax-optimized portfolio decisions are less...