Knowledge that Transforms

Many barriers to the international movement of capital across national boundaries have been dismantled over the course of the last 20 years. Financial integration was greatly enhanced by the removal of capital controls on the part of the United States, Germany, Canada, Switzerland, and the Netherlands after 1973; the recycling of surpluses to developing countries through the Euromarkets in the 1970's; the removal of capital controls in the United Kingdom and Japan beginning in 1979; financial integration among European Community countries, including France and Italy, in preparation for 1992; recent moves toward financial liberalization in smaller countries in the Pacific; and the steady process of technical and institutional innovation that has proceeded around the world. Some popular tests of international capital mobility, however, appear to show anomalous results. Martin Feldstein and Charles Horioka upset conventional wisdom in 1980 when they concluded that changes in countries' rates of national saving had very large effects on their rates of investment and interpreted this finding as evidence of low capital mobility. The argument

The book begins with a quote from J.H. Dales’ Pollution, Property, and Prices, "If it is feasible to establish a market to implement a policy, no policy-maker can afford to do without one." This book provides important evidence in support of Dales’ statement. The book is a thorough examination of the first several years of the U.S. Acid Rain Program. This innovative program uses a cap-and-trade approach, rather than the traditional command-and-control approach, to reduce sulfur dioxide (SO2) emissions. The book offers substantial evidence of the program’s success. The analysis is of both practical and scientific importance. From a practical viewpoint, the acid rain program is an ambitious effort to reduce a major pollutant. It is important for us to understand whether the program is successful and how it might be improved. From a scientific viewpoint, the authors’ analysis provides a framework and methodology for evaluating similar programs. There is much we can learn about effective regulation from the analysis.

In this article, the book written by Juan Gabriel Valdes - entitled "Pinochet's Economists: The Chicago School in Chile" - serves as a point of departure. Valdes's account of the way in which University of Chicago economists came to be linked with the Catholic University in Chile in the mid-1950s is summarized, as is his characterization of the manner in which Chilean "Chicago Boys" subsequently won control of the economics faculty there. The centerpiece of Valdes's story is the behavior of the "Chicago Boys" in restructuring Chile's economy in the service of General Pinochet's military dictatorship (1973-89). The article concludes that Valdes's treatment of two additional themes - the cross-cultural transmission of economic ideas and the capacity of Chicago School economists to accommodate to authoritarian regimes - calls for qualification.

We review and critique the empirical literature on the links between investments in children and children's attainments. The primary theoretical perspectives that dominate this literature form the framework for our review. The potential effects on children of family choices and neighborhood characteristics are emphasized. The outcomes of interest include educational attainment, fertility choices, and work-related outcomes such as earnings and welfare recipiency. A set of tables provides details on the existing empirical literature. The focus is on the economics literature, but relevant studies from other social sciences are included as well.

This paper reports the results of a statistical summary of estimates of the marginal willingness to pay (MWTP) for reducing particulate matter from hedonic property value models developed between 1967 and 1988. Results using both ordinary least squares and minimum absolute deviation estimators suggest that market conditions and the procedures used to implement the hedonic models were important to the resulting MWTP estimates. The interquartile range for these estimated marginal values (measured as a change in asset prices) lies between zero and $98.52 (in 1982-84 dollars) for a one-unit reduction in total suspended particulates (in micrograms per cubic meter). The mean MWTP is nearly five times the median ($109.90 vs. $22.40), suggesting that outliers are important influences to any summary statistics for these estimates.