Reviews the book `Updating Standard Cost Systems,' by Carole B. Cheatham and Leo R. Cheatham.

Luis Rivera-Batiz, Paul M. Romer; Economic Integration and Endogenous Growth: An Addendum, The Quarterly Journal of Economics, Volume 109, Issue 1, 1 Febru

We study the problem of financial contracting and renegotiation between a firm and outside investors when the firm cannot commit to future payouts, but assets can be contracted upon. We show that a capital structure with multiple investors specializing in short-term and long-term claims is superior to a structure with only one type of claim, because this hardens the incentives for the entrepreneur to renegotiate the contract ex post. Depending on the parameters, the optimal capital structure also differentiates between state-independent and state-dependent longterm claims, which can be interpreted as long-term debt and equity.

[We show that the positive volatility-volume relation documented by numerous researchers actually reflects the positive relation between volatility and the number of transactions. Thus, it is the occurrence of transactions per se, and not their size, that generates volatility; trade size has no information beyond that contained in the frequency of transactions. Our results suggest that theoretical research needs to entertain scenarios in which (i) both the frequency and size of trades are endogenously determined, yet (ii) the size of trades has no information content beyond that contained in the number of transactions.]

Many economists have expressed concern that approaches borrowed from the humanities or from the softer social sciences will detract from the rigor and objectivity of economic science and give voice to those without proper training-and in so doing reduce the discipline to a science no more defensible than alchemy. Since much feminist thought in economics draws heavily from intellectual traditions alien to mainstream economists (e.g. critical interpretive theory, cultural studies, and feminist theory), some economists may wonder what such modes of inquiry have to offer economics.' Further, they may ask, are there no pitfalls in modes of inquiry not disciplined by accepted economic methodologies? In short, what do those Visigoths know? My purpose is to address issues in method and theory underlying recent feminist work in economics, and to explain how economics may gain by opening its disciplinary gates. From the perspective of traditional mainstream practice in economics, two prominent issues emerge in considering modes of inquiry and theory drawn from other disciplines. The first has to do with what counts as theory and the role of critique in theorizing. The second has to do with the need to sort out better theories from worse and the perceived dangers of rampant relativism. I will address these in turn.

In a signal-extraction model of consumer behaviour, higher prices signal higher-quality products for a new product monopoly, even without cost asymmetries across different qualities. Moreover, higher-quality products earn greater expected profits, and the monopolist has an incentive to provide even transient improvements in quality. Finally, the monopolist has a positive incentive to conduct market research about quality, and produces more information than is socially optimal.

In dynamic models of unemployment in which the employed consume more than the unemployed, workers are finitely lived, and jobs are lasting, employment transfers consumption from future generations to those currently alive, resulting in a social surplus. That is, these transfers allow the current generation to consume more than its share of the output produced during its lifetime, without the increased consumption coming at the expense of future generations. Moreover, due to these intergenerational transfers, the allocation that maximizes steady-state output is Pareto dominated by another feasible allocation with a higher level of steady-state employment.