Export-Led Industrial Policy for Developing Countries: Is There a Way to Pick Winners?

[Symposium: Industrial Policy]

By Tristan Reed

Journal of Economic Perspectives, Fall 2024

Industrial policy prioritizes growth in specific sectors. Yet there is little agreement about how to target sectors in practice, and many argue that governments cannot pick winners. This essay observes that governments can and do identify tradable sectors...

The Political Economy of Industrial Policy

[Symposium: Industrial Policy]

By Réka Juhász and Nathan Lane

Journal of Economic Perspectives, Fall 2024

We examine the ways in which political realities shape industrial policy through the lens of modern political economy. We consider two broad "governance constraints": (1) the political forces that shape how industrial policy is chosen and (2) the ways in ...

Industrial Policy: Lessons from Shipbuilding

[Symposium: Industrial Policy]

By Panle Jia Barwick, Myrto Kalouptsidi, and Nahim Bin Zahur

Journal of Economic Perspectives, Fall 2024

Industrial policy has been used throughout history in some form or other by most countries. Yet, it remains one of the most contentious issues among policy makers and economists alike. In part, this is because the empirical evidence on whether and how it ...

Semiconductors and Modern Industrial Policy

[Symposium: Industrial Policy]

By Chad P. Bown and Dan Wang

Journal of Economic Perspectives, Fall 2024

Semiconductors have emerged as a headline in the resurgence of modern industrial policy. This paper explores the political economic history of the sector, the changing nature of the semiconductor supply chain, and the new sources of concern that have moti...

Alexander Hamilton's Report on Manufactures and Industrial Policy

[Symposium: Industrial Policy]

By Richard Sylla

Journal of Economic Perspectives, Fall 2024

Hamilton's 1791 state paper on manufactures is a forward-looking argument for US industrialization supported by public policies designed to encourage it. Conventional wisdom circa 1790, along with static considerations of comparative advantage indicated t...

Technological Change, Technological Catch-up, and Capital Deepening: Relative Contributions to Growth and Convergence

By Subodh Kumar and R. Robert Russell

American Economic Review, June 2002

We decompose labor-productivity growth into components attributable to (1) technological change (shifts in the world production frontier), (2) technological catch-up (movements toward or away from the frontier), and (3) capital accumulation (movement alon...

Evaluating Behavioral Incentive Compatibility: Insights from Experiments

[Symposium: Behavioral Incentive Compatibility]

By David Danz, Lise Vesterlund, and Alistair J. Wilson

Journal of Economic Perspectives, Fall 2024

Incentive compatibility is core to mechanism design. The success of auctions, matching algorithms, and voting systems all hinge on the ability to select incentives that make it in the individual's interest to reveal their type. But how do we test whether ...

Behavioral Incentive Compatibility and Empirically Informed Welfare Analysis: An Introductory Guide

[Symposium: Behavioral Incentive Compatibility]

By Alex Rees-Jones

Journal of Economic Perspectives, Fall 2024

A growing body of research conducts welfare analysis that assumes behavioral incentive compatibility—that is, that behavior is governed by pursuit of incentives conditional on modeled imperfections in decision-making. In this article, I present several ...

Designing Simple Mechanisms

[Symposium: Behavioral Incentive Compatibility]

By Shengwu Li

Journal of Economic Perspectives, Fall 2024

It matters whether real-world mechanisms are simple. If participants cannot see that a mechanism is incentive-compatible, they may refuse to participate or may behave in ways that undermine the mechanism. There are several ways to formalize what it means ...

The Problem of Good Conduct among Financial Advisers

By Mark Egan, Gregor Matvos, and Amit Seru

Journal of Economic Perspectives, Fall 2024

Households in the United States often rely on financial advisers for investment and savings decisions, yet there is a widespread perception that many advisers are dishonest. This distrust is not unwarranted: approximately one in fifteen advisers has a his...

Retrospectives: Friedman and Schwartz, Disaggregated

By Jennifer Burns

Journal of Economic Perspectives, Fall 2024

What was the contribution of Anna Schwartz to the landmark book she co-authored with Milton Friedman, A Monetary History of the United States, 1867–1960? A close examination of archival evidence suggests three primary contributions Schwartz mad...

Recommendations for Further Reading

By Timothy Taylor

Journal of Economic Perspectives, Fall 2024

An Experimental Test of an Optimal Growth Model

By Vivian Lei and Charles N. Noussair

American Economic Review, June 2002

This paper describes the design and behavior of an experimental economy with the structure of the Ramsey-Cass-Koopmans model of optimal growth. The experiment includes three different implementations of the model: a decentralized implementation with multi...

Front Matter

American Economic Review: Insights, December 2024

Law-Abiding Immigrants: The Incarceration Gap between Immigrants and the US-Born, 1870–2020

By Ran Abramitzky, Leah Boustan, Elisa Jácome, Santiago Pérez, and Juan David Torres

American Economic Review: Insights, December 2024

We provide the first nationally representative long-run series (1870–2020) of incarceration rates for immigrants and the US-born. As a group, immigrants have had lower incarceration rates than the US-born for 150 years. Moreover, relative to the US-born...

On the Equilibrium Properties of Spatial Models

By Treb Allen, Costas Arkolakis, and Xiangliang Li

American Economic Review: Insights, December 2024

We consider a broad class of spatial models where there are many types of interactions across a large number of locations. We provide a new theorem that offers an iterative algorithm for calculating an equilibrium and sufficient and "globally necessary" c...

The Impact of Criminal Financial Sanctions: A Multistate Analysis of Survey and Administrative Data

By Keith Finlay, Matthew Gross, Carl Lieberman, Elizabeth Luh, and Michael Mueller-Smith

American Economic Review: Insights, December 2024

We estimate the impact of financial sanctions in the US criminal justice system, leveraging nine natural experiments in a regression discontinuity design framework across a diverse range of enforcement levels ($17–$6,000) and institutional environments....

Noise-Tolerant Community Enforcement and the Strength of Small Stakes

By Drew Fudenberg and Alexander Wolitzky

American Economic Review: Insights, December 2024

We study community enforcement in a large population with noisy monitoring. We focus on equilibria in the prisoner's dilemma that are coordination proof, meaning that matched partners never play a Pareto-dominated Nash equilibrium in the one-shot game ind...

Fiscal Policy, Profits, and Investment

By Alberto Alesina, Silvia Ardagna, Roberto Perotti, and Fabio Schiantarelli

American Economic Review, June 2002

This paper evaluates the effects of fiscal policy on investment using a panel of OECD countries. We find a sizeable negative effect of public spending—and in particular of its wage component—on profits and on business investment. This result is consis...

Is There Too Little Antitrust Enforcement in the US Hospital Sector?

By Zarek Brot, Zack Cooper, Stuart V. Craig, and Lev Klarnet

American Economic Review: Insights, December 2024

From 2002 to 2020, there were over 1,000 mergers of US hospitals. During this period, the FTC took enforcement actions against 13 transactions. However, using the FTC's standard screening tools, we find that 20 percent of these mergers could have been pre...