This paper develops a unified framework for fixed and random effects estimation of higher-order spatial autoregressive panel data models with spatial autoregressive disturbances and heteroskedasticity of unknown form in the idiosyncratic error component. We derive the moment conditions and...

A growing number of American states require that students who do not demonstrate basic reading proficiency at the end of third grade be retained and provided with remedial services. We exploit a discontinuity in the probability of third grade retention under Floridaś test-based promotion policy...

Applied work often studies the effect of a binary variable (“treatment”) using linear models with additive effects. I study the interpretation of the OLS estimands in such models when treatment effects are heterogeneous. I show that the treatment coefficient is a convex combination of two...

In this paper we study a class of weighted estimands, which we define as parameters that can be expressed as weighted averages of the underlying heterogeneous treatment effects. The popular ordinary least squares (OLS), two-stage least squares (2SLS), and two-way fixed effects (TWFE) estimands...

We study a partnership that anticipates its possible dissolution. In our model, partnerships form in order to take advantage of complementary skills; although new opportunities may arise that make partners ̕skills useless. We characterize the optimal, incentive-compatible partnership contract...

This paper studies R&D investment decisions of a firm facing the threat of new technology entry and subject to technical uncertainty. We distinguish four scenarios: inevitable entry, entry deterrence, entry blockade, and non-credible entry threat. The entry threat stimulates the incumbent to...

As the time of leaving school determines the level of academic achievement this timing decision is central for the human capital investment decision. Real option theory offers a new perspective of the human capital investment decision under uncertainty and irreversibility. Unlike other...

In this paper we apply a real-option model to study the effects of tax rate uncertainty on a firm's decisions. In doing so, we depart from the relevant literature, which focuses on fully equity-financed investment project. By letting a representative firm borrow optimally, we show that debt...

The possibility of low-probability extreme events has reignited the debate over the optimal intensity and timing of climate policy. In this paper we therefore contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time...