Online sales in the United States have a tax advantage compared to traditional retail sales, since state sales taxes may be avoided by buying online from out-of-state vendors. How important is this in determining online demand? What are the other important issues in determining consumers’ choice between online and brick-and-mortar stores? Will Internet vendors eventually come to dominate sales?
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What makes some firms successful? So far, economists mostly looked at the amount of inputs - capital and labor - or at the quality of workers and managers. Management gurus, on the contrary, advocate the importance of good management. Is the adoption of best management practices a source of competitive advantage? If these practices do indeed enhance performance, then why do managers not always adopt them?
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Population aging is one of the key demographic trends facing the world today. Aging is particularly pronounced in developed countries, with the median age projected to rise to 45 by 2050. What are the economic effects of an aging population? How does increased dependency of elders on working-age adults affect consumption and government finances, today and in the future? This paper sheds light on these pressing issues.
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Managers frequently issue equity in periods when stock prices are rising. The fact that managers sell equity when their company’s stock price is historically high is at odds with the prevailing paradigm of corporate finance theory. The authors look for an explanation of this puzzle. They also study why firms issue equity rather than debt, and how leverage ratios vary with stock market cycles.
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Recent corporate failures and scandals call for corporate governance reform. A lively debate developed on how to structure boards of directors in order to ensure effective decision-making. Which board structures serve shareholders' interests best? Do outsider-controlled boards outperform insider-controlled ones? Are two-tiered boards more effective than single-tiered ones?
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The US trade deficit is currently at historically high levels, and plausibly some correction will take place in the future. Adjustments may occur via a devaluation of the dollar or a reduction in the US economy's growth rate with respect to the rest of the world. Which type of adjustment is more likely? How large would the movements of exchange rates and income growth need to be to restore trade balance? Why have US imports not responded as expected to the depreciation of the dollar?
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Increasing financial globalization has been one of the defining trends of the past twenty years. What are its effects on the financial side of countries’ balance sheets? Does a larger number of stocks of foreign assets and liabilities increase the impact of exchange rate movements? What are the policy implications of the interaction between financial globalization and exchange rate adjustment?
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When stock prices are far above the fundamental value of firms, economists tend to speak about a price “bubble”. Is it correct to use this term for the high valuation of dot-com firms observed at the turn of this century? Were technology stocks really overpriced or was their fundamental value higher than experts in the market now think? The paper addresses these issues taking into account uncertainty about firms’ future profitability.
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Newly created knowledge may be protected and commercialized for monetary profit or it may be freely shared to advance science. The realms of commercial science and open-source science are distinct knowledge systems that diverge in their rewards to inventors and in their means of dissemination and use of new knowledge. Can they coexist? When does one prevail over the other? What are the pros and the cons of each?
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This paper examines how the supply of funds available to a country determines its ability to run a large fiscal deficit. Why is it that a country like Italy can manage to accumulate large deficits while a country like Argentina cannot? Economics suggests that public borrowing may eat up or crowd out resources that would otherwise be available to the private sector. Does this crowding out effect differ between advanced and emerging market economies?
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