Journal of Economic Literature
Vol. 39, No. 2, June 2001
Contents
From State to Market: A Survey of Empirical Studies
on Privatization
William L. Megginson and Jeffry M. Netter
Looking into the Black Box: A Survey of the Matching
Function
Barbara Petrongolo and Christopher A. Pissarides
Silver Signals: Twenty-Five Years of Screening and Signaling
John G. Riley
Perfect Competition and the Creativity of the Market
Louis Makowski and Joseph M. Ostroy
Of Hype and Hyperbolas: Introducing the New Economic
Geography
J. Peter Neary
A Review of Monetary Policy Rules, John B. Taylor,
ed.
Christopher A. Sims
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From State to Market: A Survey of Empirical Studies on Privatization
William L. Megginson and Jeffry 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.
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Looking into the Black Box: A Survey of the Matching Function
Barbara Petrongolo and Christopher 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
spacial aggregation issues, and implications of on-the-job search and
of the timing of stocks and flows for estimated matching functions.
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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.
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Perfect Competition and the Creativity of the Market
Louis Makowski and Joseph 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.
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Of Hype and Hyperbolas: Introducing the New Economic Geography
J. Peter Neary
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."
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A Review of Monetary Policy Rules, John B. Taylor, ed.
Christopher A. Sims
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.
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