This paper provides a theoretical and empirical analysis of the effects of input price shocks on economic growth, with a focus on United Kingdom manufacturing in the 1970s. The theoretical model predicts a discrete decline in output and productivity after an input price rise, and a longer-run slowdown in productivity growth, real wage growth, and capital accumulation. These features characterize the United Kingdom and most other OECD economies after 1973. The empirical results confirm the important role of input prices in recent U.K. adjustment, but also point to an important role for other supply and demand factors.

It is well known that a domestic resource discovery gives rise to wealth effects that cause a squeeze of the tradeable good sector of an open economy. The decline of the manufacturing sector following an energy discovery has been termed the "Dutch disease," and has been investigated in many recent studies. Our model extends the principally static analyses to date by allowing for: (1) short-run capital specificity and long-run capital mobility; (2) international capital flows; and (3) far-sighted intertemporal optimizing behavior by households and firms. The model is solved by numerical simulation.

Few if any issues in public policy are as muddled and contentious as international migration. There is no international regime that establishes standards and principles for national migration policies other than in the case of refugees (migrants escaping persecution). My aim here is to describe some economic and ethical principles that may underpin an international migration regime.

Since the mid-to-late 1970's, wage inequality between low- and highly educated workers has widened markedly. The wage premium to a college education compared with a high-school education has increased by some 20 percentage points (see George J. Borjas and Valerie A. Ramey [1994] for recent estimates). Part of the explanation seems to lie with a slowdown in the growth of supply of highly educated workers in the 1980's. Another part seems to lie with a demand shift toward educated workers. Two hypotheses have been advanced to account for the alleged demand shift. The first holds that technological change has been biased in favor of high-education workers. The second holds that growing international trade with low-wage countries has shifted labor-market demand in the United States away from low-educated workers, as the United States increasingly imports goods produced by such workers from low-wage countries.