In many capacity-intensive industries (e.g. electricity, bandwidth), exchanges allow firms to buy and sell wholesale capacity before selling on the retail market. This allows firms to smooth demand shocks, but it also raises suspicions that exchanges facilitate tacit collusion to limit capacity...

We document entry and capacity expansion in US long-distance fiber-optic networks before and during the “telecom boom.” We disentangle the many swaps and leases between networks in order to measure owned route miles versus route miles shared with other carriers. Entry appears much more...

In The Bell Curve, Herrnstein and Murray (1994) claim, based on evidence from cross-sectional regressions, that differences in wages in the U.S. labor market are predominantly explained by general intelligence. Cawley, Heckman, and Vytlacil (1999), using evidence from random effects panel...

This paper studies Venezuelan economic performance from 1950 to 1998. We show that there exist wide divergences in many commonly used estimates of GDP growth and discuss the sources of those differences. We show that the choice of base year and linking techniques are crucial for the diagnosis of...

“[U]nder competition, the rate of return on investment tends toward equality in all industries.” Introductory and intermediate microeconomics textbooks are sketchy in explaining how capital is allocated by financial markets. Capital budgeting techniques, primarily net present value, deserve...

This paper explores the relevance of unknown nonlinearities for growth empirics. Recent theoretical contributions and case-study evidence suggest that nonlinearities are pervasive in the growth process. I show that the postwar data provide strong evidence in favor of generalized non-linearities....

Recently, two stylized facts about the behavior of the U.S. economy have emerged: first, macroeconomic aggregates appear to be less volatile post-1984 than in the preceding two decades; second, monetary policy appears more responsive to inflationary pressures—and thereby more “stabilizing”...

We estimate the impact of U.S. monetary policy on the cross-sectional distribution of state economic activity for a 35-year panel. Our results indicate that the effects of policy have a significant history dependence, in that relatively slow growth regions contract more following...

Yohe and Tol (2001) built an indexing method for vulnerability based on the hypothesis that the adaptive capacity for any system facing a vector of external stresses could be explained by the weakest of eight underlying determinants – the so-called “weakest link” hypothesis. Subsequent...