Large classes are an important element of higher education in the United States today. Pressures of increased enrollment and shrinking financial support are likely to insure the continued existence of large classes in our colleges and universities, even though a sizable proportion of both students and faculty view this technique of instruction as unsatisfactory. With increased size have come changes in the organization, atmosphere, activity, and acceptability of the classroom scene. In the typical large enrollment course, the professor meets the students en masse several times a week for lectures and demonstrations, and once a week the students are expected to attend small recitations

Recently, economists have begun to develop a theory of the perfectly competitive firm and industry in long-run equilibrium.' In contrast to the traditional model2 in which all prices are parametric, this new theory takes explicit recognition of the fact that output price must adjust to exogenous changes in input prices before the industry can be said to be in long-run competitive equilibrium. The focus of this analysis has been to derive implications of competitive theory which can be tested using data generated by observing individual firms in

Trade-distorting practices by other states did not seriously affect U.S. commercial interests until the mid-1960's. However, growing overall and sectoral trade deficits, as well as rapid changes in trading patterns, have made such practices a more salient political issue. The modal and preferred American policy response has been to rely on U.S.supported liberal institutions, notably the General Agreement on Tariffs and Trade (GATT), to provide a framework for multilateral negotiations designed to eliminate

In his recent article in this Review, Bruce Hamilton attempted to extend Peter Mieszkowski's (1969, 1972) analysis of property tax incidence. He correctly notes that Mieszkowski's model does not describe a market equilibrium. Hamilton's model accounts for the tax and benefit incidence of an intrajurisdictional property tax, and it delineates the competitive market adjustments due to capitalization effects. He then draws several conclusions regarding fundamental urban economic problems. However, Hamilton's model fails to describe a market equilibrium for the identical reason Mieszkowski's fails; potential supply adjustments generated by capitalization are neglected. The purpose of this comment is to correct the Hamilton model by including sufficient conditions to obtain a market equilibrium. Our reformulation of the model indicates that some of Hamilton's urban policy conclusions are utterly incorrect while others are valid only under very restrictive assumptions. Consider a Hamiltonian metropolitan area comprised of three jurisdictions: 1) a homogeneous high-income housing (HIH) community, 2) a homogeneous l'w-income housing (LIH) community, and 3) a mixed community consisting of a percent of units of LIH and (1 a) units of HIH. In the initial (pretax) equilibrium property values reflect only resource costs. A public service benefit is then provided equally to each house in every community. A proportional property tax is levied in each community based on the value of the average property in the jurisdiction. There are no net capitalization effects in the two homogeneous communities because the benefit per household equals the tax. However, the mixed community is characterized by short-run intrajurisdictional net benefit differentials (INBD). The LIH receive a fiscal surplus and the HIII incur fiscal burden due to average cost pricing of the public services. Hamilton concludes that the net benefit differences are capitalized into property values. Land is assumed to bear the capitalization effects because capital is mobile (p. 748, fn. 9). Hamilton defines this posttax capitalization state as (in supply of housing and public service) because land value differentials exactly reflect the present value of INBD (see pp. 748, 750, 752). For Hamilton's conclusion to hold we must assume the relative speeds of adjustment (i.e., mobility) of capital, renters, and land differ in that order, with capital exhibiting the greatest degree of mobility. This assumption is not inconsistent with Hamilton's model and is no doubt generally accepted.' It is essential to note that capitalization requires at least partial immobility of one or more factors (assuming nonzero elasticities of factor substitution).2 Furthermore, the Hamilton efficient state implies land is completely immobile and thus bears the full burden of INBD. The immobility of land eliminates substitution possibilities so an intrajurisdictional tax imposes only income effects. An

Despite diversity and intensity of Michael Todaro's comment (1986), essence of controversy reduces to differences in respective views of urban subsistence sector. Each view, in turn, depends upon a distinctive viewpoint. Observing from viewpoint of bureaucrat and other elite to whom he defers in his comment, Todaro sees large cityward flow of Third World humanity as a menace, destroying urban amenities. Todaro's focus being modern sector, his model only incorporates an urban subsistence sector indirectly, and then only as a way station on route to modern sector employment. His assumption is that every potential migrant has modern sector employment as an explicit goal.' Conceptually, he leaves no room for uneducated rural persons whose aspirations are keyed to modest employments of urban subsistence sector. We, on other hand, look from below, from subsistence sector. From there, we see both rural and urban welfare gains from observed spatial movement of labor. We grant that unpleasant externalities may be involved, especially from point of view of a discomfitted elite. However, those possible externalities should be studied in their own right and have no place in a debate between competing explanations of migration.2 The present debate, therefore, comes down to a straightforward empirical question. If, in fact, there are persons who move to city with intent of taking up permanent employment in urban subsistence sector, then their decisions cannot be explained by Todaro. If they are few in number, theorist may assume them away. If their numbers are significant, however, migration flows must be viewed as dual in nature and an alternative explanation for subsistence portion is required. Todaro's crucial point is that the ColeSanders' theory requires them to make an artificial separation of migration flows into those who go to modern sector and those who go to and remain in subsistence sector. This argument is effectively countered, we believe, by our crucial point that Todaro's view of an undifferentiated flow carries with it inappropriate assumption that all migrants deem themselves able to enter into modern sector employment.3

In our 1983 paper we offered evidence that the law of demand operates inside the Federal Reserve. In particular, the Fed faces a requirement that it return all revenues in excess of operating expenses to the Treasury, and this constraint lowers the price of amenities in terms of foregone profits. The monetary authority accordingly buys more of the wage and nonwage perquisites of office than otherwise. Because we treated amenities as a monotone transformation of Federal Reserve System employment, our theory suggested that the Fed would pad its operating expenses by increasing the number of employees on its payroll. Moreover, given that expansionary open market operations raise the interest income earned by the Fed on its securities portfolio, bureaucratic incentives would impart an inflationary bias to monetary policy. In subsequent tests of the theory, we found a positive and significant ceteris paribus relationship between changes in the monetary base and the size of the Fed. This result suggested that one motivation for expansions in the money supply is to finance the growth in the Fed's bureaucracy. We also found evidence that employment causes money in the sense of Christopher Sims (1972), but not the reverse, and that the growth in Fed employment over time does not appear to have been due to the fact that more people are required to manage larger money stocks. In their comments, John Boyd and John Strong suggest that there are methodological and empirical problems with our paper. Both comments focus primarily on the, causality tests, but each raises other issues designed to cast doubt on the strength of our results. In what follows, we discuss the main points raised by our critics. I. Causality

We examine changes in consumption and income inequality between 2000 and 2011. During the most recent recession, unemployment rose and asset values declined sharply. We investigate how the recession affected inequality while addressing concerns about underreporting in consumption data. Income inequality rose throughout the period from 2000 to 2011. The 90/10 ratio was 19 percent higher at the end of this period than at the beginning. In contrast, consumption inequality rose during the first half of this period but then fell after 2005. By 2011, the 90/10 ratio for consumption was slightly lower than it was in 2000.

We examine characteristics of the 400 wealthiest individuals in the United States over the past three decades as tabulated by Forbes Magazine, and analyze which theories of increasing inequality are most consistent with these data. The people of the Forbes 400 in recent years did not grow up as advantaged as in decades past. They are more likely to have started their businesses and to have grown up upper-middle class, not wealthy. Today's Forbes 400 were able to access education while young, and apply their skills to the most scalable industries: technology, finance, and mass retail. Most of the change occurred by 2001.

Explanations for Africa's poor long-run growth performance have varied over time. The theories examined include geography (Jeffrey D. Sachs and Andrew Warner 1997); institu tions (William Easterly and Ross Levine 1997;