Knowledge that Transforms

Mohsin S. Khan of International Monetary Fund reviews “The Arab Economies in a Changing World” by Marcus Noland, Howard Pack,. The EconLit Abstract of the reviewed work begins “Considers the historical performance of the Arab economies and their future prospects, focusing on the problem of how to successfully employ a large cohort of young people reaching working age. Discusses growth, productivity, and income; welfare, happiness, and discontent; the demographic challenge and the role of globalization; religion, institutions, and growth; economic policies and their effects; attitudes, interest groups, and reform; global engagement; risk, credibility, and supply response; and authoritarianism, uncertainty, and prospects for change. Noland is Senior Fellow with the Peter G. Peterson Institute for International Economics. Pack is Professor of Business and Public Policy and Professor of Economics at the Wharton School, University of Pennsylvania. Index.”

Ross Levine of Brown University and NBER reviews “Volatility and Growth” by Philippe Aghion, Abhijit Banerjee,. The EconLit Abstract of the reviewed work begins “Proposes an explanation of persistent macroeconomic volatility and its effect on growth--an explanation that highlights the role of credit constraints. Sketches a simple model that explains why lenders impose limits on how much firms can borrow. Introduces productivity shocks into the so-called AK model of endogenous growth and into the Schumpeterian model of endogenous growth, and investigates how volatility affects growth in these frameworks. Reviews the existing empirical evidence on volatility and growth. Introduces credit constraints into the Schumpeterian model and describes how they result in a reduced growth rate in the most financially underdeveloped economies. Presents empirical evidence that the growth rate is in fact substantially reduced in less financially developed countries and that productivity shocks have a bigger impact on growth in these countries. Demonstrates how volatility can emerge endogenously in a world where credit constraints sometimes bind. Studies endogenous volatility in an open-economy framework, analyzes the impact of a capital account liberalization, and draws some policy conclusions. Presents a third-generation model of currency crises. Aghion is Robert C. Waggoner Professor of Economics at Harvard University. Banerjee is Ford Foundation Professor of Economics at Massachusetts Institute of Technology and the Director of the Poverty Action Lab. Index.”

Christopher Maxwell of Boston College reviews “The Bottom Line: Observations and Arguments on the Sports Business” by Andrew Zimbalist,. The EconLit Abstract of the reviewed work begins “Explores the basic dilemmas and dynamics of the sports industry. Focuses on team management, finances, and value; league structure, design, and performance; stadiums--financing, mega-events, and economic development; antitrust and labor relations; college sports and gender equity; and media and the regulation of steroids. Zimbalist is Robert A. Woods Professor of Economics at Smith College. Index.”

Maria Cancian of University of Wisconsin reviews “Reshaping the American Workforce in a Changing Economy” by Harry J. Holzer, Demetra Smith Nightingale,. The EconLit Abstract of the reviewed work begins “Ten papers, originally presented at a conference held at the Urban Institute in Washington, D.C., in November 2005, review empirical evidence on labor force trends and various policy options that suggest important directions for workforce policy over the next few decades and beyond. Papers discuss whether a great labor shortage is coming--replacement demand in the global economy (Richard B. Freeman); an overview of U.S. workforce development policy in 2005 (Burt S. Barnow and Demetra Smith Nightingale); career-focused education and training for youth (Robert I. Lerman); higher education policies generating the twenty-first century workforce (Sarah E. Turner); employment and training policies--new directions for less-skilled adults (Paul Osterman); overcoming employment barriers--strategies to help the “hard to employ” (Dan Bloom and David Butler); immigration policy and human capital (George J. Borjas); policies to promote labor force participation of older people (Alicia H. Munnell); income supports for workers and their families--earnings supplements and health insurance (Gary Burtless); and work-family policies (Jane Waldfogel). Holzer is a professor of Public Policy at Georgetown University. Nightingale is a principal research scientist at the Institute for Policy Studies at Johns Hopkins University. Index.”

David N. Margolis of Paris School of Economics reviews “The Natural Survival of Work: Job Creation and Job Destruction in a Growing Economy” by Pierre Cahuc, Andre Zylberberg,. The EconLit Abstract of the reviewed work begins “Considers how to manage the unemployment that results from the desirable churning of the economy, drawing on recent economic research and citing examples from France, the United States, the United Kingdom, and elsewhere. Explores the extent and the necessity of the process of job destruction and job creation. Dissects the logic of job creation. Studies the management of the risks generated by the great magnitude of shifts in employment and in the workforce. Examines education, training, and employment policy. Cahuc is Professor of Economics at the University of Paris 1, Pantheon-Sorbonne, Professor at the Ecole Polytechnique, and Research Fellow at EUREQua, CREST, CEPR, and IZA. Zylberberg is Research Director at CNRS, Professor of Economics at the Ecole Polytechnique, and Research Fellow at EUREQua-University of Paris 1, Pantheon-Sorbonne. Select bibliography; index.”

Frank Cowell of London School of Economics reviews “The Persistence of Poverty: Why the Economics of the Well-Off Can't Help the Poor” by Charles Karelis,. The EconLit Abstract of the reviewed work begins “Examines the persistence of poverty in the individual sense--why poor people stay poor. Discusses what poverty is; behavioral factors in poverty; some theories; the inefficiency argument; a new way to rationalize the conduct that prolongs and worsens poverty; responses to challenges and questions; policy--what we should do differently if we believe that marginal utility is increasing amid scarcity; and economic justice reconsidered. Karelis is Research Professor of Philosophy at George Washington University. Index.”

Rachel Croson of University of Texas at Dallas reviews “Economics and Psychology: A Promising New Cross-Disciplinary Field” by Bruno S. Frey, Alois Stutzer,. The EconLit Abstract of the reviewed work begins “Ten papers present a broad view of the interface between economics and psychology. Papers discuss economics and psychology--developments and issues (Bruno S. Frey and Alois Stutzer); conditional cooperation--behavioral regularities from the lab and the field and their policy implications (Simon Gachter); a survey of economic theories and field evidence on prosocial behavior (Stephan Meier); why women and men trust others (Iris Bohnet); neuroeconomics--illustrated by the study of ambiguity aversion (Colin F. Camerer, Meghana Bhatt, and Ming Hsu); happiness and public policy--a challenge to the profession (Richard Layard); what happiness research can tell us about self-control problems and utility misprediction (Stutzer and Frey); the relevance of procedural utility for economics (Matthias Benz); the helping hand--a brief anatomy (Felix Oberholzer-Gee); and efficient social engineering and realistic cognitive modeling--a psychologist's thoughts (Ralph Hertwig). Frey is Professor of Economics at the University of Zurich. Stutzer is Assistant Professor in the Faculty of Business and Economics at the University of Basel. Index.”

Henning Bohn of University of California, Santa Barbara reviews “The Political Future of Social Security in Aging Societies” by Vincenzo Galasso,. The EconLit Abstract of the reviewed work begins “Explores the future political sustainability of social security in six countries with rapidly aging populations. Discusses crucial features of the social security debate--a cross-country analysis; theories of welfare state expansion and retrenchment; assessing the political sustainability of social security systems--a theoretical framework; the future of the social security system in France; the future of the social security system in Germany; political sustainability and reforms in Italy; political sustainability and the silent reform in Spain; political sustainability in a redistributive system--the United Kingdom; political sustainability in a redistributive system--the United States; and demographics, political sustainability, and reform options--a cross-country comparison. Galasso is Associate Professor of Economics at Bocconi University, Research Affiliate at the Centre for Economic Policy Research, and Research Fellow at the Innocenzo Gasparini Institute for Economic Research. Bibliography; index.”

Halla Yang of Harvard University reviews “Investors and Markets: Portfolio Choices, Asset Prices, and Investment Advice” by William F. Sharpe,. The EconLit Abstract of the reviewed work begins “Explores the effects of investors interacting in capital markets and the implications for those who advise individuals concerning savings and investment decisions. Presents the fundamental ideas of asset pricing in a one-period (two-date) equilibrium setting in which investors agree on the probabilities of alternative future states of the world. Considers investors' preferences. Analyzes the characteristics of equilibrium and introduces the concept of a complete market. Examines the characteristics of equilibrium and optimal portfolio choice. Confronts situations in which people disagree about the likelihood of different future outcomes. Discusses investment products. Presents advice about investment decisions. Sharpe is STANCO 25 Professor of Finance, Emeritus, at the Graduate School of Business, Stanford University. Index.”

Richard Sylla of New York University reviews “Capital Ideas Evolving” by Peter L. Bernstein,. The EconLit Abstract of the reviewed work begins “Sequel to Capital Ideas: The Improbable Origins of Modern Wall Street published in 1992. Explores how financial theories have become integrated into the fundamental structure of the daily business of investing money. Considers the attack on capital ideas by the proponents of behavioral finance, and especially on the idea of the efficient market hypothesis. Describes the current view of Paul Samuelson, an expert on market behavior and portfolio formation. Presents the views of other well-known academics who are involved in developing practical applications for the core ideas of finance theory, including Robert C. Merton, Andrew Lo, Robert Shiller, Bill Sharpe, Harry Markowitz, and Myron Scholes. Examines the success of a few institutional investors who have developed their strategies from a base composed of the principles of capital ideas. Bernstein is President of Peter L. Bernstein, Incorporated, an investment consulting firm. Bibliography; index.”