Knowledge that Transforms

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.

The main theme of David Card and Alan Krueger's book, Myth and Measurement: The New Economics of the Minimum Wage, is that the data do not support the view that minimum wages reduce employment. The most important chapter considers data for the fast food industry, where it is suggested that recent minimum wage increases may actually have increased employment, contrary to the standard theorem that labor demand curves slope down. A more reasonable view of the evidence, in this book and in many other studies going back to 1915, is that the employment effects of minimum wages are small, and difficult to detect in the noisy data available.

The paper ranks Departments of Economics in the U.S., based on publications in a set of eight "Blue Ribbon" journals during the period 1987-91. We adjust for variation in character and page size across the journals, allow for differences in journal quality and deal with changes in department composition over the period by assigning affiliation at the time of assessment rather than at the date of publication. Alternative journal set specifications are examined to test the sensitivity of the composition of the top 25 departments.

This article applies economic analysis to rural households in poor countries to see what one may mean by a "population problem." It is argued that there is a serious population problem in certain regions of the world, and that it is in varying degrees linked to poverty, to gender inequalities in the exercise of power, to communal sharing of child-rearing, and to an erosion of the local environmental-resource base. It is argued that some of the links may, to an extent, be synergistic. One manifestation of the problem is that very high fertility rates are experienced by women bearing risks of death that should now be unacceptable. An argument is sketched to show how the cycle of poverty, low birth-weight and stature, and high fertility rates can perpetuate within a dynasty. The one general policy conclusion that emerges is that a population policy in these parts should not only contain such measures as family-planning programs, improved female education, and employment opportunities, but also those measures that are directed at the alleviation of poverty, such as improved credit, insurance, and savings opportunities, and a ready availability of basic household needs, such as potable water and fuel. It is argued that these latter measures lower the net private benefits of procreation.

Monopolistic competition models have frequently been applied in macroeconomics, growth and development, and international and interregional economics. The three features of monopolistic competition, the monopoly power of producers, the lack of strategic interaction, and endogenous product variety, make it a useful framework to examine the aggregate implications of imperfect competition, increasing returns and incomplete markets. This papers presents a highly selective review in this area, with special emphasis on complementarity and its role in generating multiplier processes, business cycles, clustering, underdevelopment traps, regional disparities, and sustainable growth, or more generally, what Myrdal (1957) called the principle of circular and cumulative causation. (This abstract was borrowed from another version of this item.)

In this survey, we review the recent theoretical and empirical literature on household saving and consumption. The discussion is structured around a list of motives for saving and how well the standard theory captures these motives. We show that almost all of the motives for saving that have been suggested in the informal saving literature can be captured in the standard optimizing model. Particular attention is given to recent work on the precautionary motive and its implications for saving and consumption behavior. We also discuss the "behavioral" or "psychological" approach that eschews the use of standard optimization techniques and focuses instead on direct consideration on saving. We provide a section on facts: who save and how much. We then discuss informally the recent decline in the U.S. saving rate and whether the theory is of much use in understanding this and other changes in aggregate saving rates over time. We do not find any convincing explanation for the change in saving rates. We also discuss some analyses of saving behavior over the life-cycle, addressing such questions as whether households save "enough" for retirement and whether the consumption patterns of older households can be rationalized within a simple life cycle model. We also review a great number of studies of the consumption Euler equations. Based on our analysis of the studies cited we conclude that there is still mixed evidence that consumption is excessively sensitive to income. We also examine in depth the recent empirical literature on the precautionary motive. We conclude that although some households do seem to have a significant precautionary motive at some points in their life cycle, this motive is not so strong empirically as some investigators suggest.

Professional team sports leagues provide insight into the problems facing the management of functioning cartels. This paper provides an analysis of the incentives and outcomes inherent in the management of professional team sports cartels. Except for revenue sharing and salary caps, league cartel management outcomes are consistent with league-wide revenue maximization and have no impact on competitive balance. However, there are predictable impacts on the profitability of strong- and weak-drawing teams within the league. While providing an analytical review of the literature, the work here also yields new results concerning salary caps, local TV revenue sharing, and the behavior of cartel managers in the face of rival leagues.

Research on the standard of living now emphasizes alternatives or supplements to the national income accounts. This paper reviews the results of two decades of research using stature as a measure of health aspects of human welfare. After comparing and contrasting stature with per capita income, I consider height patterns discovered by economic historians that challenge traditional beliefs about the past, including long-term trends, cycles in heights, and the dreadfully small stature of slave children that was followed by catch-up growth. The paper concludes with comparisons to work in development economics and suggestions for research.