American Economic Association Nashville, Tennessee 0022-0515 Journal of Economic Literature 39 2 June 2001 321389 From State to Market: A Survey of Empirical Studies on Privatization William L.MegginsonJeffry M.Netter This study surveys the literature examining the privatization of state-owned enterprises (SOEs) We review the history of privatization, the theoretical and empirical evidence on the relative performance of state owned and privately owned firms, the types of privatization, if and by how much privatization has improved the performance of former SOEs in non-transition and transition countries, how investors in privatizations have fared, and the impact of privatization on the development of capital markets and corporate governance. In most settings privatization "works" in that the firms become more efficient, more profitable, and financially healthier, and reward investors. http://www.aeaweb.org/journal/contents/June2001.html American Economic Association Nashville, Tennessee 0022-0515 Journal of Economic Literature 39 2 June 2001 390431 Looking into the Black Box: A Survey of the Matching Function BarbaraPetrongoloChristopher A.Pissarides This paper surveys the microfoundations, empirical evidence, and estimation issues underlying the aggregate matching function. There is no consensus yet on microfoundations but one is emerging on estimation. An aggregate, constant returns, Cobb-Douglas matching function with hires as a function of vacancies and unemployment has been successfully estimated for several countries. Recent work has utilized disaggregated data to go beyond aggregate estimates, with many refinements and suggestions for future research. The paper discusses spatial aggregation issues, and implications of on-the-job search and of the timing of stocks and flows for estimated matching functions. http://www.aeaweb.org/journal/contents/June2001.html American Economic Association Nashville, Tennessee 0022-0515 Journal of Economic Literature 39 2 June 2001 432478 Silver Signals: Twenty-Five Years of Screening and Signaling John G.Riley The theory of market signaling and screening is a cornerstone of the new economics of information. The last two and a half decades have not only witnessed a series of remarkable theoretical developments but also a wide range of applications. This essay examines the key theoretical issues and explores their use in three major fields: industrial organization, labor, and finance. Considerable emphasis is placed on attempts to test the theory in each of these fields. http://www.aeaweb.org/journal/contents/June2001.html American Economic Association Nashville, Tennessee 0022-0515 Journal of Economic Literature 39 2 June 2001 479535 Perfect Competition and the Creativity of the Market LouisMakowskiJoseph M.Ostroy From the perspective of the Walrasian general equilibrium model, entrepreneurial and opportunistic behavior seems foreign. Can the model be refashioned so that it can accommodate such behavior? Many would say no, but we argue the contrary. Indeed, we present a reformulation of the model that serves as a gateway to, rather than a detour from, such contemporary issues as innovation and incentives. The trick is to reexamine what perfect competition means. Starting with an historical summary of general equilibrium, we sketch an image of the perfect competitor as an active market opportunist, seeking out profit potentials wherever he can. http://www.aeaweb.org/journal/contents/June2001.html American Economic Association Nashville, Tennessee 0022-0515 Journal of Economic Literature 39 2 June 2001 536561 Of Hype and Hyperbolas: Introducing the New Economic Geography J. PeterNeary Reviewing The Spatial Economy by Fujita, Krugman, and Venables, this paper argues that the key contribution of the new economic geography is a framework in which standard building blocks of mainstream economics (especially rational decision making and simple general equilibrium models) are used to model the trade-off between dispersal and agglomeration. The approach thus gives a choice-theoretic basis for a "propensity to agglomerate." http://www.aeaweb.org/journal/contents/June2001.html American Economic Association Nashville, Tennessee 0022-0515 Journal of Economic Literature 39 2 June 2001 562566 A Review of Monetary Policy Rules ChristopherSims This article reviews Monetary Policy Rules, edited by John Taylor. The book evaluates the Taylor rule, a policy rule that specifies changes in the central bank's interest rate according to what is happening to two variables, real output and inflation. Questions are raised about (a) how well the models fit the data; (b) the validity of the assumption that there has been clear improvement in monetary policy; and (c) the rule's microfoundations. http://www.aeaweb.org/journal/contents/June2001.html