Knowledge that Transforms

Drusilla Brown of Tufts University reviews “NAFTA Revisited: Achievements and Challenges” by Gary Clyde Hufbauer, Jeffrey J. Schott,. The EconLit Abstract of the reviewed work begins “Evaluates NAFTA's performance, comparing actual experience with both the objectives of the agreement's supporters and the charges of its critics. Assesses NAFTA's impact on labor; NAFTA's record on the environment; the operation of the dispute settlement and labor and environmental provisions; and overall economic gains and commercial results in the agricultural, automotive, and energy sectors. Considers why NAFTA was accompanied by an increase in immigration, rather than the hoped-for decrease. Recommends what needs to be done over the medium term to deal with the ongoing trade and investment problems of the region. Hufbauer is Reginald Jones Senior Fellow and Schott is Senior Fellow of the Institute for International Economics. Index.”

Barry Eichengreen of U of CA, Berkeley reviews “Prospects for Monetary Unions after the Euro” by Paul De Grauwe, Jacques Melitz,. The EconLit Abstract of the reviewed work begins “Eleven papers, originally presented at a CESifo conference held in Venice in July 2003, take stock of the new insights into monetary union that economists have brought since the formation of the European Monetary Union (EMU). Papers discuss the eastward enlargement of the EMU; structural reforms and the enlargement of monetary union; the endogeneity of the optimum currency area criteria and intraindustry trade--implications for EMU enlargement; exchange rate volatility and the decline of employment growth in the CEE economies; the influence of productivity, demand, and regulated prices on the real bilateral exchange rates of four accession countries; the EMU effect on trade--what's in it for the United Kingdom; output smoothing in EMU and OECD and whether we can forgo the government contribution--a risk sharing approach; the implications of a unilateral currency union for macroeconomic volatility; regional currencies versus dollarization--options for Asia and the Americas; an output perspective on a Northeast Asia currency union; and national currency--when monetary unions fall apart. De Grauwe is Professor in the Faculty of Economics and Applied Economics at the Catholic University of Leuven. Melitz is Professor in the Department of Economics at the University of Strathclyde. Index.”

Michael Ostrovsky of Stanford University reviews “Combinatorial Auctions” by Peter Cramton, Yoav Shoham, Richard Steinberg,. The EconLit Abstract of the reviewed work begins “Twenty-three papers examine combinatorial auctions from the perspectives of economics, operations research, and computer science. Papers discuss Vickrey auctions; iterative combinatorial auctions; ascending proxy auctions; simultaneous ascending auctions; the clock-proxy auction--a practical combinatorial auction design; PAUSE--a computationally tractable combinatorial auction; pseudonymous bidding in combinatorial auctions; from the assignment model to combinatorial auctions; bidding languages for combinatorial auctions; preference elicitation in combinatorial auctions; the communication requirements of combinatorial allocation problems; the winner determination problem; tractable cases of the winner determination problem; optimal winner determination algorithms; incentive compatibility in computationally feasible combinatorial auctions; noncomputational approaches to mitigating computational problems in combinatorial auctions; observations and near-direct implementations of the ascending proxy auction; a test suite for combinatorial auctions; empirical hardness models for combinatorial auctions; auctions for the safe, efficient, and equitable allocation of airspace system resources; combinatorial auctions for truckload transportation; auctioning bus routes and the London experience; and industrial procurement auctions. Cramton is Professor of Economics at the University of Maryland. Shoham is Professor of Computer Science at Stanford University. Steinberg is Reader in Operations Management at the University of Cambridge. Glossary; author and subject indexes.”

Lakshmi Iyer of Harvard University reviews “Understanding Civil War: Evidence and Analysis. Volume 2. Europe, Central Asia, and Other Regions” by Paul Collier, Nicholas Sambanis,. The EconLit Abstract of the reviewed work begins “Ten papers combine large-N quantitative empirical analysis with comparative case studies to develop the theory of civil war. Papers use the quantitative Collier-Hoeffler model of civil war to analyze a comprehensive data set of civil wars over the period 1960-99 and present case studies focusing on resources and rebellion in Aceh, Indonesia; the Lebanese civil war, 1975-90; crime, violence, and political conflict in Russia; conflict, violence, and crime in Colombia; the “troubles” of Northern Ireland; Bosnia's civil war; how Macedonia avoided civil war, 1990-2001; and civil wars in the Caucasus. A final paper synthesizes lessons and insights from the cases, uses the insights to suggest possible revisions and refinements to the Collier-Hoeffler model, and identifies a number of ways in which the theory of civil war can be expanded. Most of the contributors are either economists or political scientists. Collier is at Oxford University and its Center for the Study of African Economies. Sambanis is at Yale University. Index.”

Hilary W. Hoynes of U of CA, Davis, and National Bureau of Economic reviews “Public Policy and the Income Distribution” by Alan J. Auerbach, David Card, John M. Quigley,. The EconLit Abstract of the reviewed work begins “Eight papers, originally presented at a conference held in Berkeley in December 2003, analyze the complex interactions among demographics, poverty, the distribution of income, and public policy from a longer-run perspective, taking stock of our knowledge of trends and causes, and identifying key areas where positive economics can contribute further to our understanding of policy options. Papers discuss what the 1990s welfare reforms accomplished (Rebecca M. Blank); the take-up of social benefits (Janet Currie); government programs and social outcomes--a comparison of the United States with other rich nations (Timothy M. Smeeding); income and wealth concentration in a historical and international perspective (Emmanuel Saez); social security and the evolution of elderly poverty (Gary V. Engelhardt and Jonathan Gruber); the measurement and evolution of health inequality--evidence from the U.S. Medicare population (Jonathan Skinner and Weiping Zhou); the socioeconomic status of black males--the increasing importance of incarceration (Steven Raphael); and public health and mortality--what we can learn from the past (Dora L. Costa and Matthew E. Kahn). Auerbach is Robert D. Burch Professor of Economics and Law, Card is Class of 1950 Professor of Economics, and Quigley is I. Donald Terner Distinguished Professor and Professor of Economics at the University of California, Berkeley…. Index.”

Joseph Persky of U of IL at Chicago reviews “On Classical Economics” by Thomas Sowell,. The EconLit Abstract of the reviewed work begins “Explores the history of economics in a series of essays, some previously published. Discusses the social philosophy of classical economists; classical macroeconomics; classical microeconomics; classical methodology; J. C. L. Simonde de Sismondi--a neglected pioneer; the enigma of John Stuart Mill; the mystery of Marxian economics; and thoughts on the history of economics. Sowell is Senior Fellow at the Hoover Institution, Stanford University. Index.”

Benjamin E. Hermalin of U of CA, Berkeley reviews “Strategies of Commitment and Other Essays” by Thomas C. Schelling,. The EconLit Abstract of the reviewed work begins “Nineteen papers, some previously published, explore commitment and the paradoxes it creates in economics and politics. Papers focus on climate and society; commitment as self-command; economics and social policy; weapons and warfare; social dynamics; and decisions of the highest order. Schelling is Professor Emeritus and Distinguished University Professor, Economics and Public Policy, University of Maryland and Lucius N. Littauer Professor of Political Economy, Emeritus, Harvard University. Index.”

Paul J. Zak of Claremont Graduate University reviews “Brokerage and Closure: An Introduction to Social Capital” by Ronald S. Burt,. The EconLit Abstract of the reviewed work begins “Provides an introduction to social capital in the form of four reliable and general stylized facts that seem to apply across study populations. Pays special attention to the context of organizations and managers. Suggests that informal organizations consist of dense social clusters, or groups, between which there are occasional bridge relations when someone in one group has a friend, acquaintance, or former colleague in another group; opinion and practice vary more between than within groups due to structural holes in the flow of information across groups; and people whose networks spans structural holes are brokers and are rewarded for their integrative work. Describes how people whose relationships bridge structural holes are more likely to encounter new ideas, create good ideas, as well as express, discuss, and see how to implement ideas. Discusses network closures, which increase the odds of a person being caught and punished for displaying belief or behavior inconsistent with preferences in the closed network, and introduces the reputation mechanism by which network closure provides trust. Assesses the evidence for the “echo” hypothesis, which says that closed networks do not enhance information flow so much as they amplify existing opinion, and describes how the reputation mechanism for control… Index.”

Arthur O'sullivan of Lewis and Clark College reviews “Alleviating Urban Traffic Congestion” by Richard Arnott, Tilmann Rave, Ronnie Schob,. The EconLit Abstract of the reviewed work begins “Reacts to the apparent failure of urban transport economists' advocacy of congestion pricing, and advocates that they instead redirect their attention to policy complements to congestion pricing. Takes as its starting point the existing literature in urban transport economic theory, most of which derives from the canonical, macroscopic model, as well as the voluminous policy literature advocating congestion pricing. Suggests that the community of urban transport economists has relied excessively on the canonical macroscopic model of urban traffic congestion and that a redirection of research toward more microscopic modeling will result in more useful and effective policy analysis. Looks at downtown parking policy and demonstrates the potentially very large efficiency gains that can be achieved by rationalizing it. Examines the encouragement of bicycling and to what extent it could alleviate traffic congestion. Analyzes the staggering of work hours by dominant employers, a policy that is applied extensively but has been little analyzed. Explores the concept of the multimode ticket, a policy that entails charging cars that enter the center of the city a toll equal to the transit fare. Arnott is Professor of Economics at Boston College. Rave is Researcher at the Ifo Institute for Economic Research in Munich. Schob… Index.”

Kala Krishna of Princeton University, Penn State University, and NBER reviews “The Crisis in Government Accountability: Essays on Governance Reforms and India's Economic Performance” by Dilip Mookherjee,. The EconLit Abstract of the reviewed work begins “Six papers, based on articles written over the past decade for various books, journals, newspapers, and conferences, address the challenge of governance reforms in India. Papers discuss accountability and the decentralization of public service delivery; decentralization reforms in other developing countries and lessons for India; the reform of Indian income tax enforcement; aspects of the Indian legal system that impede economic performance and what legal reforms are needed; and regulatory failures leading to financial crises in India and other countries. Mookherjee is Professor of Economics and Director at the Institute of Economic Development at Boston University. Index.”