Knowledge that Transforms

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.”

Robert M. Stern of University of Michigan reviews “Case Studies in US Trade Negotiation. Volume 2. Resolving Disputes” by Charan Devereaux, Robert Z. Lawrence, Michael D. Watkins,. The EconLit Abstract of the reviewed work begins “Examines the debate surrounding the nature and effects of foreign direct investment (FDI) and multinational corporations (MNCs), and analyzes these phenomena in order to resolve the long-standing stalemate. Discusses a better approach to understanding FDI and MNCs; defining the subject--subtleties and ambiguities; from obscurity to international economic powerhouse--the evolution of MNCs; heterogeneity--the many kinds of FDI and MNCs and their disparate effects; perceptions and economic ideologies; why companies invest overseas; where MNCs invest and don't invest, and why; effects of FDI on less developed countries--vagaries, variables, negatives, and positives; why and how MNCs have altered international trade; MNCs versus the nation-state--whether sovereignty has been outsourced; the international regulation of MNCs--why there is no multilateral FDI regime; the case for FDI and MNCs; the case against FDI and MNCs; an agnostic conclusion--“it depends”; and an agenda for future action. Cohen is Professor in the School of International Service at American University. Index.”

Peter N. Ireland of Boston College reviews “The Causes, Costs and Compensations of Inflation: An Investigation of Three Problems in Monetary Theory” by William Oliver Coleman,. The EconLit Abstract of the reviewed work begins “Explores the causes, costs, and benefits of inflation. Discusses the theory of the demand for money; a theory of the supply of money; the Quantity Theory of Money; inflation without a quantity of money--the Wicksellian approach; technological risk and the social function of real debt; monetary risk and the social function of money debt; the Quantity Theory in a risky world; Wicksellianism in a risky world; the cost of inflation as the cost of moneylessness; and the cost of inflation as the cost of creditlessness. Coleman is Reader at the Australian National University. Index.”

Gregory Lewis of Harvard University reviews “Snipers, Shills, and Sharks: eBay and Human Behavior” by Ken Steiglitz,. The EconLit Abstract of the reviewed work begins “Examines the phenomenon of eBay through the perspective of auction theory. Discusses English and Vickrey auctions; the move from Vickrey to eBay; eBay strategies observed; what would happen if eBay were first-price; the signals that sellers send; prices; and transgressions. Appendices include further information on auctions, including some mathematical background. Steiglitz is Professor of Computer Science at Princeton University. Index.”

Neil Gandal of Tel Aviv University and CEPR reviews “Handbook on Hedonic Indexes and Quality Adjustments in Price Indexes: Special Application to Information Technology Products” by Jack Triplett,. The EconLit Abstract of the reviewed work begins “Reviews the methods employed in price indexes to adjust for quality change--“conventional” quality adjustment methods and hedonic price indexes. Discusses quality adjustments in conventional price index methodologies; hedonic price indexes and hedonic quality adjustments; when hedonic and matched model indexes give different results, and why; principles for estimating a hedonic function--choosing the variables; estimating hedonic functions--other research issues; and some objections to hedonic indexes. Triplett is with the Brookings Institution and is a consultant to the OECD. No index.”

David B. Audretsch of Max Planck Institute of Economics reviews “Prophet of Innovation: Joseph Schumpeter and Creative Destruction” by Thomas K. McCraw,. The EconLit Abstract of the reviewed work begins “Presents a biography of Joseph Alois Schumpeter (1883-1950), focusing on his relationship with capitalist innovation. Concentrates on l'enfant terrible, 1883-1926--innovation and economics; the adult, 1926-39--capitalism and society; and the sage, 1939-50--innovation, capitalism, and history. McCraw is Straus Professor of Business History Emeritus at Harvard Business School. Index.”

Alison Watts of Southern Illinois University reviews “Complex Social Networks” by Fernando Vega-Redondo,. The EconLit Abstract of the reviewed work begins “Provides a systematic and self-contained account of the fast-developing theory of complex social networks. Discusses complex networks--basic theory; epidemic diffusion; neighborhood effects in diffusion and play; searching in social networks; and search, diffusion, and play in coevolving networks. Vega-Redondo is Professor of Economics at the University of Alicante and the University of Essex. Bibliography; index.”

A. Abigail Payne of McMaster University reviews “Good and Plenty: The Creative Successes of American Arts Funding” by Tyler Cowen,. The EconLit Abstract of the reviewed work begins “Explores the debate over government funding for the arts in an attempt to make each position intelligible and sympathetic to the other side. Discusses warring perspectives; indirect subsidies--the genius of the American system; whether direct subsidies are too conservative; and copyright and the future of decentralized incentives. Cowen is Holbert C. Harris Chair of Economics at George Mason University. Index.”