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Economic Review

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Volume 92, Number 3
Third Quarter 2007

Financial Market Frictions
Ramon P. DeGennaro and Cesare Robotti
Market frictions, which exist even in efficient markets and change over time, impede trade but also offer profit opportunities. To provide a framework for understanding market frictions, the authors classify frictions into five categories.


When More Is Better: Assessing the Southeastern Economy with Lots of Data
Pedro Silos and Diego Vilán
The authors estimate a model that provides a single indicator for the southeastern economy, making it easier for policymakers and analysts to assess regional economic conditions and compare them to the broader economy.


Smoking: Taxing Health and Social Security
Brian S. Armour and M. Melinda Pitts
Because they have shorter life expectancies, smokers incur a higher net marginal Social Security tax rate than nonsmokers. This higher tax rate could affect both labor supply behavior and the Social Security System's funding.