This paper examines the impact of Euro invoicing on Italian exports to non-EU countries. In addition to examining the role of currency invoicing on the intensive and extensive margin of trade, we introduce the 'entrenched' margin of trade. We define the entrenched margin of trade as the number of transactions between two countries of a particular good. With highly disaggregated data, we use a two-stage methodology to predict the probability of Euro dominated Italian exports and then use that predicted probability on the intensive, extensive and entrenched margin of trade. Results show that the probability of Euro dominated trade invoicing reduces all three margins of trade. Specifically, a 10% increase in probability of Euro dominated Italian exports has roughly the same impact as additional 1532 km on the intensive margin of trade, 1096 km on the extensive margin of trade and 1314 km on the entrenched margin of trade. The negative effect of Euro invoicing is most consistent with lower-middle income trading partners and more thinly traded goods. We surmise that these results are due to varying access to financial instrumentation among Italian trade partners and a trade diversion effect of Italian exports to EU countries versus non-EU markets.

Many financial scandals appear to depend on a lack of skepticism on the part of their victims. Sophisticated investors trusted Bernie Madoff, for example, despite early warning signs of implausible returns. Our study investigates how education explains fraud detection in financial decision-making. In a simple survey, economics and finance students are asked to make an investment recommendation from among four hypothetical funds, including one based on Madoff’s fund. We use Truth Default Theory to explain our results. We show that education increases the likelihood that students are suspicious of Madoff’s fund, and that for students whose suspicions are aroused, education makes them less likely to choose the Madoff fund.

The currency denomination of trade has been shown in many recent contributions to have far-reaching effects on different macroeconomic phenomena, such as inflation and the international transmission of nominal shocks. In this work, we apply a novel index of bargaining power, which incorporates the network dimension of trade and brings fresh evidence as to the relevance of network-related features (and implied bargaining power) in the choice of invoicing currency, which has received relatively little attention in the empirical literature, so far. By using a highly disaggregated, almost transaction level, data set of Italian imports and exports, we contribute to the existing empirical literature by documenting a very significant impact of trade network asymmetries, captured by our adjusted index of market share, on the choice of an invoice currency.

Since beginning operations in 1947, the International Monetary Fund (IMF) has evolved from its original purpose of overseeing the world’s monetary system to becoming a loan administrator for member nations facing extreme economic crises. Today, the IMF provides conditional lending programs to catalyze economic recovery and growth in recipient countries. Critics of these programs cite various reasons for conditional loan program failures, naming the borrowing countries, creditor countries, and/or the IMF itself as responsible. Using data from 8,377 loan conditions associated with 93 countries’ IMF loan arrangements from 2000 to 2014, this article studies the effects of complying with individual conditions on the borrowing countries’ real gross domestic product (GDP) growth rate. Our results suggest that real GDP growth rates are directly affected by meeting the compliance standards of select loan conditions. JEL Classifications: 019, F35

In this paper, we use a unique dataset to examine the cause of return irregularity in financial markets around the end of the year. Year-end return irregularities are often attributed to either window-dressing or preferred habitat. We study year-end return irregularities in the foreign exchange swap market. We find that the return of a contract ending before the end of the year is lower than the return of a contract ending after the beginning of the year. The results support the existence of the preferred habitat and provide some evidence of window dressing in foreign exchange swaps.

We formalize a discrete-choice model of program selection from the view of college football recruits. With a conditional logit model, we correctly predict the recruit's preferred college for 65% of the 19,815 individuals, besting a purely random guess method (21%). We focus on the role football will play in postcollegiate careers of high-rated, mid-rated, and low-rated prospects in choosing a school. Highrated and mid-rated recruits value historical on-the-field success, historical head coach success, stadium capacity, media exposure, facilities, and coaching expenditures. Academic considerations and more recent on-the-field success, however, are more dominant factors for low-rated recruits.

Using a large, transaction-level dataset of Italian exports and imports with non-European Union countries, we assess the role of migrants’ networks in shaping the currency denomination of trade. Our results, new to the literature, show sizable, significant effects of migration on the currency denomination of trade. Generally, more migrants lead to more invoicing in the exporter's and importer's currency relative to a vehicle currency, higher educated migrants increase invoicing in the exporter's and importer's currency relative to a vehicle currency, and Italian migrants living in foreign countries have a greater impact relative to foreign migrants living in Italy.

We examine the Vegas line in college football games by employing two separate regression models to deconstruct the Vegas line and actual margin of victory for 4,590 unique contests from the 2005 through 2011 seasons. A comparison of these two models suggests which factors represent a true relationship with the margin of victory and which reflect bettor biases. An additional model of the margin of victory illustrates which factors the Vegas line systematically misrepresents. The authors find a number of factors inadequately priced in the Vegas line that help explain variation in the actual margin of victory. Using a holdout dataset comprised of the 2012 and 2013 seasons we identify the magnitude of any mispricing and opportunities for arbitrage. We exploit this mispricing to develop and evaluate profitable betting strategies. A strategy betting on the top 35% mispriced games yields 55% correct picks and a 2.7% APY. A second strategy in which only the top 8% of mispriced games are bet yields 59% correct picks and a 5.9% APY.

Events in the Eurozone have raised the possibility that a Eurozone member departs the currency union. We devise a simulation to examine whether trading firms in the departed country will continue to invoice their product in the Euro or elect another currency denomination strategy. Because trading firms have flexibility in choosing their invoicing currency, they make an excellent case for studying the currency usage patterns of other economic actors that may emerge after Eurozone departure. Results suggest that greater price discrimination leads to more use of the buyer's currency while firms that set only one price will tend to denominate that price in the U.S. dollar. Low exchange rate volatility between the exiting country's new currency and the Euro leads to more Euro usage.

The currency denomination of trade has important effects on inflation and the macroeconomic transmission of shocks. This study examines the currency denomination of Italian exports and imports with countries outside the European Union during 2010. By using a unique dataset we find evidence to suggest that invoicing currencies do not always have consistent determinants. Significant effects, new to the literature, include the massive, robust effect of geography and tax treaties, which suggest the importance of information asymmetry. The distance between trading partners has one of the largest marginal effects, increasing the likelihood of vehicle currency use relative to the euro.

The purpose of this study is to examine changes to tourists' image of a destination throughout a trip experience. Using Blackberry technology, a group of Canadian student travelers to Peru were asked to record images and experience about their trip during several key moments (pre-trip, upon arrival, half-way, departure, and post-trip). The results of this mixed methods study indicate that tourists' destination image is dynamic and continuously evolving throughout their trip, and various incidents during the trip could impact it. Of particular importance are the impressions made upon arrival and departure, as they are powerful determinants of post-trip images. Affective image appear to be rather haphazard during the trip whereas most respondents' cognitive image follows a specific pattern where the subjects go through an adjustment period at the beginning of the trip (resulting in lowered scores) but then rebound in a positive direction from that point. Further, post-trip cognitive scores tend to continue to rise significantly while affective scores tend to return to pre-trip levels.

The law of one price asserts that, with costless trade, prices for identical goods in different countries should be equal after accounting for the exchange rate. The empirical literature suggests that exchange rate pass-through to prices is low and that the law of one price fails; instead, firms are more likely to price to market. This study adds to the literature by examining the pricing strategy of comic book firms within the context of the competition's pricing behavior in a duopoly industry. Comic books, uniquely, display their retail prices in multiple countries on their cover giving us detailed information about the pricing behavior of each individual firm and their competition which allows us to test a pricing-to-market model. We find that an empirical model of an imperfectly applied law of one price outperforms a simple competitive, pricing-to-market model of pricing. Retail exchange rate pass-through rates between Canada and the United States average 76.8 %. This high exchange rate pass-through rate for comic books exists despite the existence of sticky prices and convenience pricing.

Given the wide use of economic freedom in economic literature it is imperative to understand how economic freedom evolves. Results suggest that levels of economic freedom are dominated by random shocks. Using a test for stationarity devised by Westerlund and Larsson (2012) we are unable to reject the null hypothesis of a random walk. The changes to economic freedom also are mostly driven by random shocks with only a minor role played by country specific characteristics. Additionally, changes to economic freedom are partially reversed as increases (decreases) in one year are partially offset by decreases (increases) in the next year.

Price clustering in financial markets is pervasive. Using transaction-level data from the world's largest financial market, this study is the first to examine price clustering behavior in the foreign exchange swap market. In addition to existing hypotheses, we investigate new determinants of price clustering including the expected return, contract liquidity, and trader's identity. The results support both negotiation and price resolution hypotheses. We find a positive effect from the level of expected return on price clustering. Markets with greater liquidity experience reduced clustering. Transactions involving domestic banks have less clustering suggesting an information advantage over foreign banks.

Measured by transaction volume, foreign exchange swaps are the largest market in the world. However, there are very few empirical studies of swap rates. Theoretically, covered interest parity is commonly assumed. But what factors determine arbitrage opportunities? We create a unique microstructure model of exchange rate activity to identify theoretical predictions regarding covered interest arbitrage in a market with a dominant market maker. Using a unique data set of actual, recorded swap transactions, not price quotes, the model is verified as we find economically significant returns that depend in part on market volatility, contract irregularity and trader identity.

We examine approximately 1,000 high school quarterbacks that are recruited into collegiate athletics to determine what factors impact the player’s decision to transfer to another school, change their position from quarterback, complete their eligibility (and presumably graduate), to be drafted into the National Football League and/or to make a professional roster at any level. Results suggest that minority student-athletes are more than twice as likely to change their position; this is especially sensitive because most college coaches are white. Players that attend universities near their hometown see significant benefits in terms of their collegiate outcomes and likelihood of playing professionally, perhaps because of greater access to their hometown’s social network.

Using unique data of Football Bowl Subdivision college football games, we examine the determinants of coach compensation, football expenses and performance. We find that coach compensation is highly related to the coach’s past success. Additionally, coach pay is higher when the institution has a larger fan base and the program has achieved a higher profit in the previous year. Football expenses are likewise determined by institutional characteristics such as the fan base, past profitability and historical success. Results suggest that coach compensation has no measurable impact on performance. A coach’s past success may impact their salary but their salary has no significant impact on future success. Though, an additional, aspirational increase in spending of $1 million on the football program can improve the probability of winning any particular game by 3.5% to 7.0%. Thus, the budget of an administrator is a better predictor of future performance than the coach’s salary.

During the recent credit crisis, European currencies tended to depreciate when the domestic country had relatively high long-term interest rates overshooting traditional uncovered interest rate parity. Absolute interest rate differentials, not innovations to the interest rate differential, drove the depreciation. The degree of the crisis, as measured by the TED spread, amplified this effect. Current account deficits, high inflation, and external debt held by governments or by banks only indirectly drove depreciation by creating higher domestic interest rates. In addition to the interest rate effect, Hungary saw currency depreciation relative to other East European currencies as the TED spread widened.