Knowledge that Transforms

This is a review article of the book Economic and Financial Crises in Emerging Market Economies, edited by Martin Feldstein and published in 2003.

This is a review article of Putting Auction Theory to Work (Cambridge University Press 2004) by Paul Milgrom.

This article reviews the theory of speculative bubbles. Bubbles are a promising candidate as an explanation for the stock price run-up and collapse of the 1990s in the United States. The theory considers both irrational and rational bubbles, with emphasis on the latter. Rational bubbles, defined as the excess of security or portfolio prices over present values, can occur under conditions that are well understood. One argument relies on the assumed Pareto-optimality of equilibrium that rules out rational bubbles, but it is suggested that this argument is implausible.

This paper provides an introduction to how knowledge is modeled in economic contexts and the role played by the concepts of knowledge and common knowledge in economic analysis.

This paper reports the results of a survey regarding the instances of plagiarism reported by journal editors in the economics profession. The survey finds that nearly 24% of responding editors encounter one case of plagiarism in a typical year. In addition, the survey reveals that less than 19% of responding journals have a formal policy regarding plagiarism. Moreover, there is a great deal of variance in what is considered plagiarism and what an appropriate response to plagiarism should be. A majority of editors believe that the economics profession would benefit from a professional code of ethics.

This paper reviews the extant empirical studies of financial innovation. Adopting broad criteria, the authors found just two dozen studies, over half of which (fourteen) had been conducted since 2000. Since some financial innovations are examined by more than one study, only fourteen distinct phenomena have been covered. Especially striking is the fact that only two studies are directed at the hypotheses advanced in many broad descriptive articles concerning the environmental conditions (e.g., regulation, taxes, unstable macroeconomic conditions, and ripe technologies) spurring financial innovation. The authors offer some tentative conjectures as to why empirical studies of financial innovation are comparatively rare. Among their suggested culprits is an absence of accessible data. The authors urge financial regulators to undertake more surveys of financial innovation and to make the survey data more available to researchers.

This paper reviews the extant empirical studies of financial innovation. Adopting broad criteria and spanning a long time horizon, we found surprisingly few studies (39), with most (23) having been conducted since 1998. Especially striking is that only two studies test hypotheses advanced in many descriptive articles as to the economic/environmental conditions that encourage financial innovation. We offer conjectures as to why empirical studies of financial innovation are comparatively rare, including as a culprit the absence of accessible data. We urge financial regulators to undertake more surveys of financial innovation and to make the resulting data available to researchers.

The paper analyzes the linkages between the reform strategies in transition countries and economic performance. We focus on agriculture because of the sharpness of the policy changes, fundamental differences among countries, and relative simplicity of agricultural relationships. We document post reform performance in the transition countries of Asia and Europe. We show how: a.) pricing reform and subsidy reductions; b.) land rights reform and policies that affect farm restructuring; and c.) the presence institutions that facilitate exchange (either markets or market substitutes) affect output and productivity. The paper ends with general lessons on reforms and transition.