We study the properties of heteroskedasticity-robust confidence intervals for regression parameters. We show that confidence intervals based on a degrees-of-freedom correction suggested by Bell and McCaffrey (2002) are a natural extension of a principled approach to the Behrens-Fisher problem. We suggest a further improvement for the case with clustering. We show that these standard errors can lead to substantial improvements in coverage rates even for samples with fifty or more clusters.We recommend that researchers routinely calculate the Bell-McCaffrey degrees-of-freedom adjustment to assess potential problems with conventional robust standard errors.

We evaluate the efficacy of a blended formative/summative assessment tool developed to support mastery learning by students without placing undue burden on instructors. Our innovation provides students with an opportunity to take a more difficult “challenge” quiz to demonstrate their command of the material and improve their grade on regular in-class quizzes. The structure of these quizzes motivates students to modify study behaviors (formative component) and take responsibility for knowledge acquisition (summative component). This mastery-based testing approach serves to bring the student's objective of a quality grade in line with the instructor's objective of quality learning.

Lincoln's election produced Southern secession, war, and abolition. Using a new dataset on slave sales, we examine connections between news and slave prices for the period 1856–1861. By August 1861, slave prices had declined by roughly one-third from their 1860 peak. That decline was similar for all age and sex cohorts and thus did not reflect expected emancipation without compensation. The decision to secede reflected beliefs that the North would not invade and that emancipation without compensation was unlikely. Both were encouraged by Lincoln's conciliatory tone before the attack on Fort Sumter, and subsequently dashed by Lincoln's willingness to wage all-out war. (JEL D72, D74, D83, G14, H77, N31, N41)

This paper examines the determinants and the effects of CEO stock ownership guideline adoption, differentiating Not-meet/Meet adopters – those setting the guideline above/below the CEO’s stock ownership at the time of adoption. While Meet adoption is mainly determined by factors related to stakeholder management, we find that Not-meet adoption is associated with factors related to both incentive alignment and stakeholder management. CEO ownership increases and CEO incentive alignment improves for Not-meet firms. But CEO ownership and incentives are unchanged for Meet firms following guideline adoption. We find no evidence that CEO compensation changes abnormally after adoption. Not-meet firms have larger improvement in operating performance and better stock performance than Meet firms. We provide evidence that the motives and the effects of guideline adoption depend on the level of the ownership restriction relative to the CEO’s ownership at the time of adoption.

The US economy has performed better when the president of the United States is a Democrat rather than a Republican, almost regardless of how one measures performance. For many measures, including real GDP growth (our focus), the performance gap is large and significant. This paper asks why. The answer is not found in technical time series matters nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior total factor productivity (TFP) performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future. (JEL D72, E23, E32, E65, N12, N42)

This paper incorporates the foreign interest in the determination of a country's international trade policy into a model of political competition between candidates contesting elective office. We envisage foreign and domestic producer interests as expressing political support for a candidate via campaign contributions, and candidates as making trade policy pronouncements to maximize political support from producer interests. Tariffs are divisive, but VERs are consistent with conciliatory policy positions yielding mutual gain to foreign and domestic interests. No candidate has an interest in formulating a trade policy position using a tariff if a VER is a policy option. Protection in the developed countries has in recent years often taken the form of bilaterally negotiated voluntary export restraints (VERs) rather than the more traditional unilaterally imposed import restrictions.' The use of voluntary export restraints has been paralleled by interest in the theoretical literature. The effects of VERs have been compared with tariffs and quotas, and VERs have been examined in a political-economy framework with a view to identifying the gainers and losers from this form of restric

This study investigates how Schwartz’s cultural dimensions of embeddedness and mastery affect the corporate cost of debt through bankruptcy risk and sensitivity to agency activity channels. Using data from 33 countries, we find a strong and robust negative relation between embeddedness and the cost of debt. The estimated relation between mastery and the corporate cost of debt is negative and significant in most of the tests. Further analyses reveal that the development of financial intermediation and the enforcement of insider trading law moderate the relation between culture and the cost of debt. Confirming our hypotheses, we document that embeddedness is negatively related to bankruptcy risk and sensitivity to agency activity. We find that mastery is positively related to bankruptcy risk across countries as well, but this relation is weaker. We also show that mastery is positively related to sensitivity to agency activity among countries with highly leveraged firms.

Consider an industry composed of N firms in a symmetric equilibrium. Designate a subset of S (< N) firms and marginally reduce the strategic variables of the firms in the subset. If the remaining firms simultaneously make the best reply to this exogenous displacement, under what circumstances will profits of the firms in the designated subset increase? We show that, in the case of Cournot competition among producers of perfect substitutes, a marginal contraction is strictly beneficial (strictly harmful) if and only if the number of firms in the designated subset exceeds the adjusted number of firms outside it by strictly more (strictly less) than one. The adjustment factor is unity when cost and demand functions are linear but, more generally, depends on the convexity of the cost and demand curves. Thus, a marginal contraction of two firms in a triopoly has no effect on the profits of firms in the subset if cost and demand functions are linear; if instead cost is linear but the inverse demand function is strictly concave (strictly convex), a marginal contraction will strictly decrease (strictly increase) profits. The analysis is extended to the effects of nonmarginal exogenous changes in the outputs of the constrained firms. This extension has implications for the relationship of Stackelberg (sequential move) and Nash (simultaneous move) equilibria. Our analysis has broad application. To illustrate, we show that it unifies results in the literature on export subsidies, horizontal mergers, and strikes. The paper is organized as follows. In Section I, our comparative-static result is derived. In Section II, we present a wide range of applications. In the conclusion and the Appendix we generalize our analysis to other situations involving strategic substitutes.