American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 41 2 June 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=41&issue=2&issue_date=June 2003 Journal Article The Rise of the Regulatory State Edward L.Glaeser AndreiShleifer 401 425 The Progressive Era of the early twentieth-century U.S. saw significant growth of government regulation of business. We model the choice of law enforcement strategy between private litigation over accidents, regulation of precautions, a combination of the two, and doing nothing. Any of these strategies can be subverted by private parties, at a cost. Private litigation may be more vulnerable to subversion than regulation, especially as the scale of enterprise grows. The rise of regulation is seen as an efficient response to subversion of justice. The model makes sense of the progressive reform agenda. It may also help explain what institutions of law and order are appropriate in what circumstances-a crucial issue for transition economies and emerging markets. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=41&issue=2&article=1&issue_date=June 2003 10.1257/002205103765762725 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 41 2 June 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=41&issue=2&issue_date=June 2003 Journal Article What Is Wrong with Taylor Rules? Using Judgment in Monetary Policy through Targeting Rules Lars E. O.Svensson 426 477 It is argued that inflation targeting is best understood as a commitment to a targeting rule rather than an instrument rule, either a general targeting rule (explicit objectives for monetary policy) or a specific targeting rule (a criterion for the forecasts of the target variables to be fulfilled), essentially the equality of the marginal rates of transformation and substitution between the target variables. Targeting rules allow the use of judgment and extra model information, are more robust and easier to verify than optimal instrument rules, and can bring the economy close to the socially optimal equilibrium. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=41&issue=2&article=2&issue_date=June 2003 10.1257/002205103765762734 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 41 2 June 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=41&issue=2&issue_date=June 2003 Journal Article Forecasting Volatility in Financial Markets: A Review Ser-HuangPoon Clive W.J.Granger 478 539 Financial market volatility is an important input for investment, option pricing, and financial market regulation. The emphasis of this review article is on forecasting instead of modelling; it compares the volatility forecasting findings in 93 papers published and written in the last two decades. Provided in this paper as well are volatility definitions, insights into problematic issues of forecast evaluation, data frequency, extreme values and the measurement of "actual" volatility. We compare volatility forecasting performance of two main approaches; historical volatility models and volatility implied from options. Forecasting results are compared across different asset classes and geographical regions. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=41&issue=2&article=3&issue_date=June 2003 10.1257/002205103765762743 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 41 2 June 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=41&issue=2&issue_date=June 2003 Journal Article Review of Drug War Heresies by MacCoun and Reuter Steven D.Levitt 540 544 MacCoun and Reuter's primary goal is to understand how current U.S. drug policies can be improved. They carefully describe the facts and trends regarding drug usage, criminal justice enforcement, and the harms associated with drug use, then discuss the public debate surrounding drug prohibition and give an informal treatment of the theory underlying the competing positions. The authors study policies towards other vices like gambling, cigarettes, alcohol, and prostitution, as well as drug policies in other times and places. The broader implication that emerges is that there is a desperate need for better data and increased research if there is any hope for making truly informed policy on illicit drugs. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=41&issue=2&article=4&issue_date=June 2003 10.1257/002205103765762752 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 41 2 June 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=41&issue=2&issue_date=June 2003 Journal Article On Networks and Markets by Rauch and Casella, eds. Ezra W.Zuckerman 545 565 This essay reviews Networks and Markets, edited by James E. Rauch and Alessandra Casella. This book provides a useful vehicle for clarifying the main conceptual and operational issues facing the growing study of economic networks. Three types of networks are discussed: networks as concentrated or patterned exchange; as primordial relations; and, the most general, networks as structures of mutual orientation. An overview is provided of the challenges faced by research on the economic implications of three types of networks. The strengths and weaknesses of current research on economic networks are examined via a review of the contributions in the book. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=41&issue=2&article=5&issue_date=June 2003 10.1257/002205103765762761 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 41 2 June 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=41&issue=2&issue_date=June 2003 Journal Article Review of Hoshi and Kashyap's Corporate Financing and Governance in Japan JuroTeranishi 566 574 Examining the development of the Japanese financial system since the Meiji era, Hoshi and Kashyap derive a number of interesting propositions on the evolution of bank-centered financing, its contribution to rapid growth, and its future transformation. They argue that the piecemeal approach to deregulation is one of the main reasons for the current banking crisis, and conclude that Japan will shift to a capital market-based financial system like the one in the United States or in prewar Japan. Hoshi and Kashyap's work makes an important contribution as a coherent long-term overview of Japan's bank-centered financial system. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=41&issue=2&article=6&issue_date=June 2003 10.1257/002205103765762770 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 41 2 June 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=41&issue=2&issue_date=June 2003 Journal Article Book Reviews 575 632 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=41&issue=2&article=7&issue_date=June 2003 10.1257/002205103765762789 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 41 2 June 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=41&issue=2&issue_date=June 2003 Journal Article Annotated Listing of New Books 633 743 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=41&issue=2&article=8&issue_date=June 2003 10.1257/002205103765762798 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 41 2 June 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=41&issue=2&issue_date=June 2003 Journal Article JEL Classification System 744 755 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=41&issue=2&article=9&issue_date=June 2003 10.1257/002205103765762806