American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 4 December 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=4&issue_date=December 2006 Regular Articles Regulating Infrastructure: The Impact on Risk and Investment GraemeGuthrie 925 972 The last thirty years have witnessed a fundamental change in the regulation of infrastructure industries. Whereas firms were subject to rate of return regulation and protected from entry in the past, they now face various forms of incentive regulation, competition is actively promoted by many regulators, and both regulators and the firms they regulate must often confront rapid technological progress. This paper surveys the literature on the investment implications of different regulatory schemes, highlighting the relevance of modern investment theory, which puts risk and intertemporal issues, such as the irreversibility of much infrastructure investment, center stage. It discusses the impact on regulated monopolists’ investment behavior of key regulatory characteristics, namely the price flexibility allowed by the regulator, the length of the regulatory cycle, and the costs the regulator will allow the firm to recover at future regulatory hearings. It also considers the impact of competition, especially the situation where a vertically integrated firm has its operation of a bottleneck asset regulated, on investment by regulated firms and their competitors. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=4&article=2&issue_date=December 2006 10.1257/jel.44.4.925 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 4 December 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=4&issue_date=December 2006 Regular Articles Illegal Migration from Mexico to the United States Gordon H.Hanson 869 924 In this paper, I selectively review recent literature on illegal migration from Mexico to the United States. I begin by discussing methods for estimating stocks and flows of illegal migrants. While there is uncertainty about the size of the unauthorized population, new data sources make it possible to examine the composition of legal and illegal populations and the time-series covariates of illegal labor flows. I then consider the supply of and demand for illegal migrants. Wage differentials between the United States and Mexico are hardly a new phenomenon, yet illegal migration from Mexico did not reach high levels until recently. An increase in the relative size of Mexico’s working-age population, greater volatility in U.S.–Mexico relative wages, and changes in U.S. immigration policies are all candidate explanations for increasing labor flows from Mexico. Finally, I consider policies that regulate the cross-border flow of illegal migrants. While U.S. laws mandate that authorities prevent illegal entry and punish firms that hire unauthorized immigrants, these laws are imperfectly enforced. Lax enforcement may reflect political pressure by employers and other interests that favor open borders. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=4&article=1&issue_date=December 2006 10.1257/jel.44.4.869 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 4 December 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=4&issue_date=December 2006 Back Matter JEL Classification System 1153 1165 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=4&article=8&issue_date=December 2006 10.1257/jel.44.4.1153 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 4 December 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=4&issue_date=December 2006 Back Matter Doctoral Dissertations in Economics 1166 1192 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=4&article=9&issue_date=December 2006 10.1257/jel.44.4.1166 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 4 December 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=4&issue_date=December 2006 Back Matter Annotated Listing of New Books 1081 1152 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=4&article=7&issue_date=December 2006 10.1257/jel.44.4.1081 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 4 December 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=4&issue_date=December 2006 Regular Articles Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Bank's Economic Growth in the 1990s: Learning from a Decade of Reform DaniRodrik 973 987 Proponents and critics alike agree that the policies spawned by the Washington Consensus have not produced the desired results. The debate now is not over whether the Washington Consensus is dead or alive, but over what will replace it. An important marker in this intellectual terrain is the World Bank’s Economic Growth in the 1990s: Learning from a Decade of Reform (2005).With its emphasis on humility, policy diversity, selective and modest reforms, and experimentation, this is a rather extraordinary document demonstrating the extent to which the thinking of the development policy community has been transformed over the years. But there are other competing perspectives as well. One (trumpeted elsewhere in Washington) puts faith on extensive institutional reform, and another (exemplified by the U.N. Millennium Report) puts faith on foreign aid. Sorting intelligently among these diverse perspectives requires an explicitly diagnostic approach that recognizes that the binding constraints on growth differ from setting to setting. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=4&article=3&issue_date=December 2006 10.1257/jel.44.4.973 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 4 December 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=4&issue_date=December 2006 Regular Articles How Big a Problem is Too Big to Fail? A Review of Gary Stern and Ron Feldman's Too Big to Fail: The Hazards of Bank Bailouts Frederic S.Mishkin 988 1004 This review essay examines whether too-big-to-fail is as serious a problem as Gary Stern and Ron Feldman contend. This essay argues that Stern and Feldman overstate the importance of the too-big-to-fail problem and do not give enough credit to the FDICIA legislation of 1991 for improving bank regulation and supervision. However, this criticism of the Stern and Feldman book does not detract from many of its messages. The policy recommendations in their book have merit even if the too-big-to-fail problem is currently not that serious because these policies make it less likely that a banking crisis will occur even if driven by other factors. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=4&article=4&issue_date=December 2006 10.1257/jel.44.4.988 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 4 December 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=4&issue_date=December 2006 Regular Articles Economics and the Biologists: A Review of Geerat J. Vermeij's Nature: An Economic History JoelMokyr 1005 1013 This essay reviews and criticizes Vermeij’s Nature: An Economic History and places it in the context of evolutionary economics. Vermeij presents a natural history written in what he considers economic terms and argues that biologists should know more about economics. While the exchanges between economics and biology can sometimes be hazardous and misleading, quite a bit could be learned by economists from reading this book. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=4&article=5&issue_date=December 2006 10.1257/jel.44.4.1005 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 4 December 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=4&issue_date=December 2006 Book Reviews Book Reviews 1014 1080 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=4&article=6&issue_date=December 2006 10.1257/jel.44.4.1014