at a time when a further cut of farm income would be unwise. For Dr. Colm, the inadequate treatment of tax policy, the failure to consider the alternative sequels to an inventory decline (an interruption to a continued rise? a sideways movement after the decline? a further drop?) and finally the absence of any discussion of policy should the cold war become hotter these inadequacies are troublesome. Professor Bronfenbrenner wants a more adequate treatment of both growth and the international aspects of the problems. For Professor Hansen, the crucial weakness of the Report lies in the failure to deal with structural deficiencies related to a decline in government contribution and private investment. He contends that a revision of fiscal policy is required if GNP is to be maintained and to grow proportionately with the rise of productivity and numbers in the labor market. In the absence of a modified fiscal policy, the country's losses will be in the tens of billions of dollars. May I end by commending the excellent job done by the Joint Committee and its able staff, headed by Grover Ensley? The Chairman selected witnesses fairly, giving each vested interest fair representation and at the same time eliciting the cooperation of the best professional economists. Their seminars would have done credit to any university, with the discussion at a high level. There was no browbeating of witnesses: the purpose was to obtain the best assessments of the situation and the most practical proposals for therapy. In the Committee's Report, there was substantial agreement of members of both parties (the main areas of disagreement were some aspects of tax and investment policies); and more incisive and improved treatment (in the view of this writer) than in the Council Report on many points (e.g., public investment, a declaration to assure our friends abroad concerning anti-depression policy, agricultural policy, the adequacy of resources for a sound military policy). In view of the deterioration of Committee procedures on Capitol Hill, the Joint Congressional Committee deserves the approbation of all as a model committee. All the more to be regretted is the failure of other committees always to pay the attention that these recommendations deserve. It should be added, however, that the recommendations of the Joint Committee this year seem to have had considerable influence.

A SMALL shelf of new books covers the I L gamut of economic policies proposed for the postwar world, from the virtual socialism of the first two works to the free enterprise system of the third, and through the working compromises envisaged in the last two documents. The literary pieces of the Left and Right are done in bold strokes and brilliant hues: they are addressed to the eye and to the heart. The official pieces are coolly rational, moderate, and a trifle dull. Without intimating that the car of economic policy should in fact be steered according to the guidebook of greatest literary pungency and novelty, let us turn first to the Economics of Full To the theoretical economist this will be the most interesting of the lot because it displays the logical conclusions of one branch of the Keynesian revolution. In the introductory essay F. A. Burchardt considers theories concerning the Cause of Unemployment under three main divisions. The first set of ideas, ascribing to deviations from free competition, is made by Burchardt to mean indifferently that monopolistic organizations in industry and in the labor market . . . restrict output and employment opportunities, or that unemployment exists because wages are too high (pp. I, 13). The latter more prescinded and less defensible proposition apparently discredits in Burchardt's thinking the former, much more inclusive, idea. Similarly natural wave theories, which embrace the concepts of self-generative cycles, are for him thoroughly discredited as explanations of because he believes they regard the cycle as beyond human control. We are thus left with the demand-deficiency theory of unemployment. Burchardt believes that the revolutionary discovery (p. 32) that the free play of the market does not automatically produce full employment renders obsolete the idea that market forces work in any way toward a rational utilization of resources. A second essay, by Michael Kalecki, marked by daring abstractness in analysis and daring inventiveness in policy, weighs the relative merits of (i) deficit spending, (2) stimulating private investment, and (3) redistributing income from the rich to the poor, as Three Ways to Full Employment. Kalecki's general conclusions are that the second is relatively unsatisfactory, that the third is promising, but that it will probably have to be supplemented by the first. Kalecki regards political opposition as the only significant limit on achieving full employment by income transfers (p. 55). Otherwise we have the categoric pronouncement that redistribution of income from higher to lower income classes increases effective demand; here (as throughout the Schumacher essay on public finance) the squeezing of profit margins always encourages fuller production and employment. The deterrent effect on investment which may proceed from differential taxes on profits or from steeply progressive income taxes, and which some authors regard as more or less completely offsetting the stimulus to consumption, is neglected entirely. The inferiority of stimulating private investment as a road to full employment is a consequence of Kalecki's underlying assumption of I The Economics of Full Oxford: Basil Blackwell. I944. Vii, 2I3 pp. I2 shillings, 6 pence. [Six studies in Applied Economics prepared at The Oxford University Institute of Statistics.] Full Employment in a Free Society, by William H. Beveridge. New York: W. W. Norton and Company, Inc. I945. 429 pp. $3.75. The Road to Serfdom, by Friedrich A. Hayek. Chicago: University of Chicago Press. I944. Viii, 248 pp. $2.75. Employment Policy. New York: The Macmillan Company. I944. 31 pp. $I.00. [Published by Permission of the Controller of His Majesty's Stationery Office.] Economic Stability in the Postwar World: The Conditions of Prosperity after the Transition from War to Peace. Geneva: League of Nations. I945. 3I9 pp. $2.50 (paper). [Report of the Delegation on Economic Depression, Part II.]

A new specification of health-insurance-plan choice is developed that uses a nonparametric functional form for the loss function used to evaluate insurance premiums and uncertain out-of-pocket expenditure. The approach is implemented on data resulting from one firm's implementation of a new health plan with three distinct health insurance options. Health expenditure differences greater than 500 percent are observed, indicating extremely strong biased selection. Plan choices are consistent with a convex loss function for small losses, which suggests that consumers underweight high-loss/low-probability outcomes relative to low-loss/high-probability ones. Copyright 1989 by MIT Press.

El proposito del articulo es analizar, utilizando modelos keynesianos, los efectos de las operaciones de mercado abierto y de las variaciones de los requisitos de reservas sobre las tasas de interes de prestamos y de depositos. Las conclusiones, aparentemente obvias, son que aumentos de los requisitos de reservas, comparado con disminuciones de la base monetaria, tienden a ampliar la brecha entre las tasas de prestamos y de depositos. Por ello, parece preferible utilizar las modificaciones de la base monetaria como instrumento de politica monetaria, a no ser la autoridad monetaria abone intereses por las reservas de los Bancos.