This paper develops a dynamic model that addresses a central political economy question in much of the former Soviet Union (and arguably in many developing countries as well): Will those who obtained assets at large discounts, or stole them, in the beginning of the transition become the vanguard of the rule of law, or will they be indifferent to or even actively frustrate the establishment of t...

Management of portfolios from which funds are withdrawn involves two strategic decisions at the fund level: asset allocation and the spending rule. Asset allocation and the spending rule are traditionally linked, for example, to preserve capital on average, but there should be a closer dynamic linkage between the two. This article describes a new protective strategy that links spending and asse...

The École Polytechnique Fédérale de Lausanne (EPFL) is currently using a Web-based experimentation environment to support laboratory activities in engineering education. The key service for the acceptance of the learning modalities and the appropriation of the environment by the students is a shared electronic notebook called the eJournal. This service is not only used by students to perform th...

We put forward a general equilibrium model that links the cross-section variation of expected returns to …rms’life cycle dynamics. In the model all assets have the same exposure to short-run consumption risks, but di¤er in their exposure to long-run consumption risks (Bansal and Yaron (2004)). An econometrician who uses conditional CAPM regression to predict asset returns will obtain higher for...

We investigate the impact of measures of uncertainty on firms’ capital investment behavior using a panel of U.S. firms. Increases in firmspecific and CAPM -based measures have a significant negative effect on investment spending, while market-based uncertainty has a positive impact.

I model a scenario in which investors do not know the payoff distributions of relatively newer firms and use the payoff distribution of similar well-established firms as starting points. The starting distributions are then adjusted for size, volatility, and other differences. Anchoring bias (Tversky and Kahneman (1974)) implies that such adjustments typically fall short. I show that adjusting c...

We examine the relation between US stock market returns and the US business cycle for the period 1960 2003. We identify two channels in the transmission mechanism. One is through the mean of stock returns via the equity risk premium, and the other is through the volatility of returns. We find that the relation is asymmetric with downturns in the business cycle having a greater negative impact o...