Knowledge that Transforms

Edward Fiske and Helen Ladd's review of market-based educational reforms in New Zealand are assessed in light of recent developments. We agree that predicted benefits were overstated, that there were both losers and winners, and that educational nirvana did not result. In our view, however, the main impact was to make schools' problems more transparent, creating discomforting pressures and attempts to undermine this transparency. We examine responses to changes in zoning laws, the effects of socioeconomic status on observed outcomes, signalling and value-added behavior, and school accountability. We find that educational reforms produce substantial short-term changes, largely on the demand-side.

Two distinct but interrelated issues are investigated here. The first concerns Sraffa's critical role in contemporary philosophy through his pivotal influence on Wittgenstein. The intellectual origins of this profound influence can be traced to the philosophical interests of the activist political circle in Italy (clustered around the journal L'Ordine Nuovo) to which both Sraffa and Antonio Gramsci belonged. The second inquiry concerns the influence of Sraffa's philosophical views on his economics. Sraffa's economic contributions can be much better understood by paying attention to the way Sraffa changed the nature of the questions asked, rather than seeking different answers to already established questions.

It is argued that inflation targeting is best understood as a commitment to a targeting rule rather than an instrument rule, either a general targeting rule (explicit objectives for monetary policy) or a specific targeting rule (a criterion for (the forecasts of) the target variables to be fulfilled), essentially the equality of the marginal rates of transformation and substitution between the target variables. Targeting rules allow the use of judgment and extra-model information, are more robust and easier to verify than optimal instrument rules, and they can nevertheless bring the economy close to the socially optimal equilibrium.

It is argued that inflation targeting is best understood as a commitment to a targeting rule rather than an instrument rule, either a general targeting rule (explicit objectives for monetary policy) or a specific targeting rule (a criterion for (the forecasts of) the target variables to be fulfilled), essentially the equality of the marginal rates of transformation and substitution between the target variables.Targeting rules allow the use of judgment and extra-model information, are more robust and easier to verify than optimal instrument rules, and they can nevertheless bring the economy close to the socially optimal equilibrium.

A rich array of institutional diversity makes the United States an excellent place to study the relationship between political institutions and public policy outcomes. This essay has three main aims. First, it reviews existing empirical evidence on the relationship between institutional rules, political representation and policy outcomes. It aims to place the literature into a broader context of theoretical and empirical work in the field of political economy. Second, it develops a parallel empirical analysis that updates studies in the literature and re-examines some of the claims made, in a setting unified both in terms of policy outcomes and the period under study. Third, the paper develops some new directions for research, presenting a small number of novel exploratory results.

We survey the evidence bearing on measurement error in the CPI and provide our best estimate of the magnitude of CPI bias. We also identify a "weighting" bias in the CPI that has not been previously discussed in the literature. In total, we estimate that the CPI overstates the change in the cost of living by about 0.6 percentage point per year, with a confidence interval that ranges from 0.1 to 1.2 percentage points. Roughly half of this bias is accounted for by the CPI's inability to fully capture the welfare improvement from quality change and the introduction of new items. Our bias estimate is smaller than that found in several earlier studies, in part because the BLS has recently made a variety of improvements to its procedures; our study highlights several potential areas for further improvement.

This paper reviews the literature on commercial sport through the lens of the economic theory of contests/tournaments. It seeks to draw together research on incentives in individualistic sports such as golf and footraces with the research on uncertainty of outcome and competitive balance in team sports such as baseball and soccer. The contest framework is used to analyze issues such as the optimal distribution of prizes, the impact of revenue sharing, salary caps, draft rules, and a variety of other restraints commonly employed in sports leagues. The paper draws heavily on a comparative analysis of contest organization, in particular between North America and Europe.