Journal of Economic Literature
Vol. 38, No. 2, June 2000
Contents
Preferential Trade Liberalization: The Traditional
Theory and New Developments
Arvind Panagariya 287
Developments in Non-Expected Utility Theory: The Hunt
for a Descriptive Theory of choice under Risk
Chris Starmer 332
What Do We Say about Ourselves and What Does It Mean?
Yet Another Look at Economics Department Research
Jerry G. Thursby 383
Review of Sargent's The Conquest of American Inflation
Ramon Marimon 405
Book Reviews
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Preferential Trade Liberalization: The Traditional Theory and New Developments
Arvind Panagariya
This paper begins by systematically developing the "static" theory of
preferential trade areas (PTAs) and showing that neither a large volume
of initial intra-union trade nor geographical proximity can serve as a
guide to welfare enhancing PTAs. The paper then discusses the modern literature
addressing welfare effects of simultaneous division of the world into
many PTAs, the impact of the decision to form a PTA on external tariffs
and the "dynamic" time-path question of whether PTAs are building blocks
or stumbling blocks towards multilateral freeing of trade. A final section
discusses key theoretical considerations in the empirical evaluation of
PTAs.
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Developments in Non-Expected Utility Theory: The Hunt for a Descriptive
Theory of Choice under Risk
Chris Starmer
This article reviews recent developments in the economic theory of individual
decision making under risk. Since the 1950s it has been known that individual
choices violate the standard model of expected utility in predictable
ways. Considerable research effort has now been devoted to the project
of developing a superior descriptive model. Following an overview of non-expected
utility theories which distinguishes between "conventional" and "non-conventional"
approaches, the paper seeks to assess these alternative models in terms
of empirical success (using laboratory and field data) and theoretical
usefulness. The closing sections reflect on some new directions emerging
in this literature.
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What Do We Say about Ourselves and What Does It Mean? Yet Another Look
at Economics Department Research
Jerry G. Thursby
Statistical and programming techniques are used to examine economics
department quality rankings and how resources and research output are
related. Four questions are asked using the National Research Council's
1993 survey. Are there significant differences in department quality scores?
How are quality scores related to publications, citations and numbers
of Ph.D.s produced? What is the relation between research output and department
resources? How well do departments generate research in comparison with
other departments with similar levels of resources? What I find is that
resources determine outputs, outputs determine opinions (which are generally
diffuse) and most departments efficiently use their resources.
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Review of Sargent's The Conquest of American Inflation
Ramon Marimon
Sargent's book provides a reinterpretation of the US inflation record
over the last half-century, reflecting on how macroeconomic theory has
evolved since the beginnings of the rational expectations revolution.
It is a basic reference on dynamic macroeconomic theory.
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