Conventional tests of the predictability of stock returns could be invalid, that is reject the null too frequently, when the predictor variable is persistent and its innovations are highly correlated with returns. We develop a pretest to determine whether the conventional t-test leads to invalid...

This paper examines how uncertainty and credit constraints affect the cyclical composition of investment and thereby volatility and growth. We develop a model where ï¬rms engage in two types of investment: a short-term one; and a long-term one, which contributes more to productivity...

Using a panel of OECD countries from 1960 to 2002, this paper shows that interest rates, particularly those of long-term government bonds, decrease when countries’ fiscal position improves and increase around periods of budget deteriorations. Stock market prices surge around times of...

We develop an approximate solution method for the optimal consumption and portfolio choice problem of an infinitely long-lived investor with Epstein–Zin utility who faces a set of asset returns described by a vector autoregression in returns and state variables. Empirical estimates in...

I survey the influence of Grossman and Hart's (1986) “The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration,†94 Journal of Political Economy 691–719.) seminal paper in the field of International Trade. I discuss the implementation of the theory in...

We use a French firm-level data set containing 13,000 firms over the period 1994–2004 to analyze the relationship between credit constraints and firms’ R&D behavior over the business cycle. Our main results can be summarized as follows: (i) R&D investment is countercyclical without...

Why do indemnity insurance plans cost substantially more per capita—77% more in our study—than HMOs? We answer this question using data from a large organization’s insurance pool, covering 215,000 lives. We decompose cost differences for eight major medical conditions into...

For-profit, or proprietary, colleges are the fastest-growing postsecondary schools in the nation, enrolling a disproportionately high share of disadvantaged and minority students and those ill-prepared for college. Because these schools, many of them big national chains, derive most of their...

This paper explores the link between employee perceptions of working conditions and the desire for worker representation in Britain and the US. We find that the distribution of employee perceptions of poor working conditions is similar in Britain and the US; similar factors affect the number of...