The language barrier – the fact that different countries have different native languages – has been documented in numerous studies as reducing international trade. This paper investigates the possibility that trade partners with no common native language will overcome the language barrier by communicating in a non-native language. In today’s world English is the leading candidate to play this role of a lingua franca. By constructing and then employing a new measure of English proficiency covering more than a hundred countries and spanning 30 years, we show that the ability to communicate in English has a strong effect in promoting trade across the globe. The results thus demonstrate that an acquired proficiency in English can mitigate the impact of historically determined language barriers.

Grade inflation and high grade levels have been subjects of concern and public debate in recent decades. In the mid-1990s, Cornell University's Faculty Senate had a number of discussions about grade inflation and what might be done about it. In April 1996, the Faculty Senate voted to adopt a new grade reporting policy which had two parts: 1) the publication of course median grades on the Internet; and 2) the reporting of course median grades in students' transcripts. The policy change followed the determination of a university committee that "it is desirable for Cornell University to provide more information to the reader of a transcript and produce more meaningful letter grades." It was hoped that "More accurate recognition of performance may encourage students to take courses in which the median grade is relatively low." The median grade policy has remained to date only partially implemented: median grades have been reported online since 1998 but do not yet appear in transcripts. We evaluate the effect of the implemented policy on patterns of course choice and grade inflation. Specifically, we test two related hypotheses: First, all else being equal, the availability of online grade information will lead to increased enrollment into leniently graded courses. Second, high-ability students will be less attracted to the leniently graded courses than their peers. Building on these results we perform an exercise that identifies the extent to which the change in student behavior resulted in an increase in the university-wide mean grade.

This paper locates turning points in the Israeli-Palestinian conflict since the late 1980s using asset market data from Israel and the Palestinian Authority (PA). We find that major escalations in violence, such as the outbreak of the Intifada in 2000, lead to significant declines in asset prices in both Israel and the PA. Conversely, major peace initiatives, such as the Oslo accords in 1993 and the Road Map plan in 2003, lead to substantial increases in asset prices on both sides of the conflict. An additional novel finding is that asset markets respond positively to the success of politicians who favour a negotiated settlement to the conflict.

Since the outbreak of the Intifada in September 2000, the Israeli government has extensively employed a policy of assassinating members of Palestinian terrorist organizations. Theoretically, the net effect of an assassination on future terrorism is indeterminate because it embodies two conflicting effects: the assassination of a terrorist hurts his organization's capabilities, but may increase the motivation for future attacks. Our indirect, empirical evaluation of the effectiveness of assassinations for Isreali counterterrorism is based on Israeli stock market reactions to news of such operations. We rely on the fact that terrorism has had significant adverse effects on the Israeli economy and claim that the stock market should react positively to news about effective counterterrorism measures but negatively to news about counterproductive ones. We find that the market does not react to assassinations of low-ranked members of Palestinian terrorist organizations. The market does react strongly, however, to the assassinations of senior leaders of terrorist organizations: it declines following assassinations targeting senior political leaders but rises following assassinations of senior military leaders. To the extent that these reactions reflect expectations regarding future levels of terrorism they imply that the market perceives the first type of assassinations as counterproductive, but the second as an effective measure in combating terrorism.