Knowledge that Transforms

THE RELATIONSHIPS between a priori theory and a posteriori theorizing are numerically large and causally complex. Few economists use only one method, yet relatively little has been written recently on the subject of economic methodology or the study of the criteria one uses for accepting principles. This article is a survey for economics students of the principal elements of our federal statistical data series. The point of departure is the census of manufacturers and thus the body of the article, even though some historical reference is employed, is neither a chronological listing of the growth of data collection nor an analysis of the perception of the problems of and improvements in statistical technique. Suffice it to stress the themes 1) that constructs (such as stock vs. flow) were perceived before extensive data were collected, 2) that some constructs (like the consumption function) proved empirically to be so unstable (or in other cases so hard to estimate) that they were neglected in favor of other a priori constructs, and 3) that data and constructs collected for one area of analysis of the economy are frequently converted for use in other areas of the economy (agricultural production functions are a useful example).

The categories listed below are used to classify books, book reviews, journal articles, and dissertations indexed in JEL, JEL on CD, EconLit, and www.e-JEL.org . New changes to the classification system appear as soon as possible on www.econlit.org . The JEL classification system may be used freely for scholarly purposes. We suggest the following format: “JEL: A10, B10, etc.”

The categories listed below are used to classify books, book reviews, journal articles, and dissertations indexed in JEL, JEL on CD, EconLit, and www.e-JEL.org . New changes to the classification system appear as soon as possible on www.econlit.org . The JEL classification system may be used freely for scholarly purposes. We suggest the following format: “JEL: A10, B10, etc.”

The categories listed below are used to classify books, book reviews, journal articles, and dissertations indexed in JEL, JEL on CD, EconLit, and www.e-JEL.org . New changes to the classification system appear as soon as possible on www.econlit.org . The JEL classification system may be used freely for scholarly purposes. We suggest the following format: “JEL: A10, B10, etc.”

The list below specifies doctoral degrees conferred by U.S. and Canadian universities during academic year July 2015 to June 2016. Lists of degree recipients and subject classifications are provided by the university. Note: Dissertations without classifications may be found under “Y Miscellaneous Categories.”

GDP, the most fundamental concept of aggregate economics, is often misunderstood and misused. In a brief book, Diane Coyle attempts to demystify and clarify the concept by providing what she calls “an affectionate history.” The product is a lucid and clear presentation that however must come with a caution sign. The story is often incomplete, and what it does contain is not always accurate. Among the salient and controversial topics discussed are the adequacy of GDP for the twenty-first century, the deficiencies of GDP as a measure of welfare, and the strange way in which banking services are calculated. (JEL B22, E01, E23)

NANCY STOKEY AND ROBERT LUCAS, JR., and Ed Prescott have produced an exceptionally useful, thorough, and timely introduction to stochastic economic dynamics. Dynamic optimization techniques developed in Operations Research, formulated initially by Richard Bellman (1957), have been used extensively in economics, particularly in macroeconomics, finance, and public finance. Economic theorists have extended dynamic programming theory in several valuable directions. Of particular note for this book is the concept of recursive equilibrium introduced in Edward Prescott and Rajnish Mehra (1980). While these techniques have been used extensively, there has been no broad, unified, and comprehensive presentation of the concepts, tools, and applications of recursive dynamic techniques that is written for economists and demands no more mathematics than a typical student is exposed to in a good graduate program. This book succeeds marvelously in filling this need. Furthermore, given the depth of development, it is also a valuable reference for researchers. Before describing the book's contents in detail, we should discuss what is distinctive and important about the recursive approach to dynamic economic problems. To do this, let's examine a simple problem and an alternative approach to its solution. The canonical problem for economic dynamics is the infinite horizon deterministic growth problem. Let k, be the capital stock at the beginning of period t, f(kt) a neoclassical production function expressing period t production as a function of kt, ct consumption in period t chosen at the end of the period, u(c) a concave utility function, and I the discount factor. Then a social planner for this infinitely lived economy will solve the problem

pUBLIC FINANCE iS treated in the new International Encyclopedia of the Social Sciences (IESS) in 14 articles totaling some 74,000 words, exclusive of bibliographies (see the accompanying tabulation). In addition, several biographical articles deal with contributions to public finance made by their subjects. The authors are all scholars of standing, and readers can be confident that the treatment meets accepted standards of professional competence. Rather than commenting systematically on the individual articles, I propose to try to characterize the scope and nature of the coverage of the field, illustrating points by reference to particular articles, and to compare the treatment of public finance in the new encyclopedia (IESS) with that in the Encyclopaedia of the Social Sciences (ESS) which was published in 1930-35. The biographical articles are mentioned but not examined. Finally, I shall venture some remarks on the editorial emphasis of the IESS and the state of the discipline of public finance.

The New Palgrave Dictionary of Money and Finance is a successor to the 1987 work The New Palgrave: A Dictionary of Economics. Both dictionaries claim descent from Palgrave's Dictionary of Political Economy, published as a summary of the state of economics during the 1890s. The same team of three editors is responsible for both New Palgrave dictionaries,1 and there are many similarities in approach. Indeed, about 20 percent of the essays in the New Palgrave Money and Finance are reprinted from the New Palgrave Economics (and ten essays are reprinted from the original Palgrave). There are also some obvious differences between the two New Palgrave dictionaries. The New Palgrave Economics had a much broader scope, aiming to cover all of modern economics. It was considerably larger than the New Palgrave Money and Finance, with four volumes rather than three, 3500 pages rather than 2500, and almost 2000 essays rather than 1000 or so. The New Palgrave Economics included biographical essays, which took up about a third of the work; the New Palgrave Money and Finance has no biography but includes many short definitions of technical terms. Last but not least, the New Palgrave Economics omitted empirical topics to concentrate on economic theory and history of economic thought, while the New Palgrave Money and Finance covers much empirical material.

I have benefited from comments and criticisms of an earlier draft by Irma Adelman, Peter Balacs, Ronald Dore, Edgar Edwards, Unni Eradi, Michael Faber, Anne Gordon, Keith Griffin, Jill Rubery, Seev Hirsch, Ernest Stern, Frances Stewart, Hugh Stretton, B. R. Virmani, Gordon Winston and Howard Wriggins. To these, and to a research seminar at Queen Elizabeth House, I am very grateful. I am also grateful to the Economic Development Institute of the World Bank and its Director, Mr. Andrew Kamarck, for having provided the facilities and stimulating atmosphere for the early stages of a considerably larger paper, commissioned by Mr. Ernest Stern, of which this paper forms a part. I am grateful to Mr. Stern and the World Bank for permitting me to use the material here.