Journal of Economic Literature

doi: 10.1257/jel.48.1.ipmid: N/A

Abstract Front matter includes Table of Contents.

doi: 10.1257/jel.48.1.1pmid: N/A

Abstract Front matter includes Table of Contents.

Blattman, Christopher; Miguel, Edward

doi: 10.1257/jel.48.1.3pmid: N/A

Abstract Most nations have experienced an internal armed conflict since 1960. Yet while civil war is central to many nations' development, it has stood at the periphery of economics research and teaching. The past decade has witnessed a long overdue explosion of research into war's causes and consequences. We summarize progress, identify weaknesses, and chart a path forward. Why war? Existing theory is provocative but incomplete, omitting advances in behavioral economics and making little progress in key areas, like why armed groups form and cohere, or how more than two armed sides compete. Empirical work finds that low per capita incomes and slow economic growth are both robustly linked to civil war. Yet there is little consensus on the most effective policies to avert conflicts or promote postwar recovery. Cross-country analysis of war will benefit from more attention to causal identification and stronger links to theory. We argue that micro-level analysis and case studies are also crucial to decipher war's causes, conduct, and consequences. We bring a growth theoretic approach to the study of conflict consequences to highlight areas for research, most of all the study of war's impact on institutions. We conclude with a plea for new and better data. (JEL D72 , D74 , O17 )

Adams, Renée B; Hermalin, Benjamin E; Weisbach, Michael S

doi: 10.1257/jel.48.1.58pmid: N/A

Abstract This paper is a survey of the literature on boards of directors, with an emphasis on research done subsequent to the Benjamin E. Hermalin and Michael S. Weisbach (2003) survey. The two questions most asked about boards are what determines their makeup and what determines their actions? These questions are fundamentally intertwined, which complicates the study of boards because makeup and actions are jointly endogenous. A focus of this survey is how the literature, theoretical as well as empirical, deals—or on occasions fails to deal—with this complication. We suggest that many studies of boards can best be interpreted as joint statements about both the director-selection process and the effect of board composition on board actions and firm performance. (JEL G34 , L25 )

Ioannides, Yannis M

doi: 10.1257/jel.48.1.108pmid: N/A

Abstract This assessment of Scott Page's The Difference (Princeton University Press, 2007) emphasizes the depth and breadth of the book's coverage and arguments and checks them against existing empirical evidence, when available. It argues that the book navigates artfully between being a “manifesto” for diversity and rigorous science writing while at the same time marketing economic science in new ways. The review welcomes the book's popularization of richer aspects of everyday decision making, individual and collective, and its making an excellent case for the social significance of abstract economic theorizing, especially about problem solving. It praises the book's lively interpretations of statistical tools of decision making by means of enticing narratives. The book's rhetoric urges us to move beyond accepting diversity as a matter of taste, or even because of its beneficial effects on the “production function,” and ultimately adopts its powerful logic. It speculates that the book's true impact will likely come after thorough empirical research. In empirical endeavors, issues of definition, especially of identity and of measurement, and evaluation of policies that would enhance diversity would be decisive. In democratic societies, policies may pose new dilemmas as they benefit from public interest in overcoming the accumulation of past disadvantages. (JEL D23 , Z13 )

Blinder, Alan S

doi: 10.1257/jel.48.1.123pmid: N/A

Abstract The nature and scope of the Federal Reserve's authority and the structure of its decision making are now “on the table” to an extent that has not been seen since 1935, and the Fed's vaunted independence is under some attack. This essay asks what the Federal Reserve should—and shouldn't—do, leaning heavily on the concept of economies of scope. In particular, I conclude that the central bank should monitor and regulate systemic risk because preserving financial stability is (a) closely aligned with the standard objectives of monetary policy and (b) likely to require lender of last resort powers. I also conclude that the Fed should supervise large financial institutions because that function is so closely to regulating systemic risk. However, several other functions now performed by the Fed could easily be done elsewhere. (JEL E52 , E58 , G21 , G28 )

Feldstein, Martin

doi: 10.1257/jel.48.1.134pmid: N/A

Abstract In this essay, I explain my reasons for the following policy recommendations: (1) The Fed should continue to manage monetary policy as it has in the past, should act as the nation's lender of last resort, should fully supervise the large bank holding companies and their subsidiary banks, and should be given resolution authority over the institutions that it supervises. (2) While a council of supervisors and regulators can play a useful role in dealing with macro prudential risks, it should not replace the central role of the Federal Reserve. (3) The virtually unlimited lending powers that the Fed has recently exercised in creating credit and helping individual institutions should be restricted in duration and subjected to formal Treasury approval backed by Congressional preauthorization of funds. (4) The Fed's capital rules for commercial banks need to be strengthened by replacing the existing risk-based capital approach with a broader definition of risk and the introduction of contingent capital. (5) Subjecting mortgage lending to a broader range of Federal Reserve regulations and allowing the Fed to deal with nonbank creators of mortgage products would be better than the creation of a new consumer financial protection organization. (JEL E52 , E58 , G21 , G28 )

doi: 10.1257/jel.48.1.146pmid: N/A

Abstract Editor's Note: Guidelines for Selecting Books to Review Occasionally, we receive questions regarding the selection of books reviewed in the Journal of Economic Literature . A statement of our guidelines for book selection might therefore be useful. The general purpose of our book reviews is to help keep members of the American Economic Association informed of significant English-language publications in economics research. We also review significant books in related social sciences that might be of special interest to economists. On occasion, we review books that are written for the public at large if these books speak to issues that are of interest to economists. Finally, we review some reports or publications that have significant policy impact. Annotations are published for all books received. However, we receive many more books than we are able to review so choices must be made in selecting books for review. We try to identify for review scholarly, well-researched books that embody serious and original research on a particular topic. We do not review textbooks. Other things being equal, we avoid volumes of collected papers such as festschriften and conference volumes. Often such volumes pose difficult problems for the reviewer who may find herself having to describe and evaluate many different contributions. Among such volumes, we prefer those on a single, well-defined theme that a typical reviewer may develop in his review. We avoid volumes that collect previously published papers unless there is some material value added from bringing the papers together. Also, we refrain from reviewing second or revised editions unless the revisions of the original edition are really substantial. Our policy is not to accept offers to review (and unsolicited reviews of) particular books. Coauthorship of reviews is not forbidden but it is unusual and we ask our invited reviewers to discuss with us first any changes in the authorship or assigned length of a review.

doi: 10.1257/jel.48.1.146.r1pmid: N/A

Abstract Marc Levinson of Council on Foreign Relations reviews “Uncommon Sense: Economic Insights, from Marriage to Terrorism” by Gary S. Becker, Richard A. Posner,. The EconLit Abstract of the reviewed work begins “Presents a collection of articles from the joint opinion blog of Gary S. Becker and Richard A. Posner on a range of contemporary issues in economic policy. Focuses on topics in sex and population; property rights; universities; incentives; jobs and employment; environment and disasters; crime and punishment and terrorism; and the world. Becker is University Professor in the Department of Economics, the Department of Sociology, and the Graduate School of Business at the University of Chicago. Posner is a judge of the U.S. Court of Appeals for the Seventh Circuit and senior lecturer in law at the University of Chicago. Index.”

doi: 10.1257/jel.48.1.146.r2pmid: N/A

Abstract Albert Fishlow of Columbia University reviews “The Life and Times of Raul Prebisch, 1901-1986” by Edgar J. Dosman,. The EconLit Abstract of the reviewed work begins “Explores the historical and political contexts of Raul Prebisch’s life and career. Discusses childhood--the dreams of Tucuman; university in Buenos Aires; apprenticeship; a taste of power; being a central banker; opening to Washington; the aftermath of Pearl Harbor and World War II in Argentina; the dismissal of Prebisch from the Central Bank under the new Argentine government; discovery of Latin America; a solitary scholar; triumph in Havana; claiming the Economic Commission for Latin America; the creation of Latin America; Prebisch’s return to Buenos Aires after the overthrow of Juan Peron; return to Santiago; the Kennedy offensive; Prebisch’s involvement with UNCTAD; the gospel of Don Raul; trials in Washington; Prebisch’s role as a prophet; and the final years of Prebisch’s life. Dosman is Senior Research Fellow in the Centre for International and Security Studies at York University. Bibliography; index.”