Education and the Age Profile of Literacy into Adulthood

[Symposium: Investment in Children]

By Elizabeth Cascio, Damon Clark, and Nora Gordon

Journal of Economic Perspectives, Summer 2008

American teenagers perform considerably worse on international assessments of achievement than do teenagers in other high-income countries. This observation has been a source of great concern since the first international tests were administered in the 19...

The Lengthening of Childhood

[Symposium: Investment in Children]

By David Deming and Susan Dynarski

Journal of Economic Perspectives, Summer 2008

Over the past 40 years, the age at which children enter first grade has slowly drifted upward. In the fall of 1968, 96 percent of six-year-old children were enrolled in first grade or above. By 2005, the proportion had dropped to 84 percent, mainly becaus...

Global Imbalances: Globalization, Demography, and Sustainability

[Symposium: U.S. Trade Deficit]

By Richard N. Cooper

Journal of Economic Perspectives, Summer 2008

The current account deficit of the United States has been large in recent years, both in absolute size and relative to GDP. In 2006, it reached $811 billion, 6.1 percent of GDP. It has become a dominant feature of the world economy; if you sum up the curr...

Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate

[Symposium: U.S. Trade Deficit]

By Martin Feldstein

Journal of Economic Perspectives, Summer 2008

The massive deficit in the U.S. trade and current accounts is one of the most striking features of the current global economy and, to some observers, one of the most worrying. Although the current account deficit finally began to shrink in 2007, it remain...

Forensic Finance

By Jay R. Ritter

Journal of Economic Perspectives, Summer 2008

During popular prime-time television shows, forensic investigators use specialized but wide-ranging scientific knowledge of chemical trace evidence, bacteria, DNA, teeth, insects, and other specialties to collect and sift evidence of possible crimes. In e...

A Pragmatic Approach to Capital Account Liberalization

By Eswar S. Prasad and Raghuram G. Rajan

Journal of Economic Perspectives, Summer 2008

In the mid-1990s, mainstream economists of nearly all stripes commonly recommended capital account liberalization -- that is, allowing a free flow of funds in and out of a country's economy -- as an essential step in the process of economic development. B...

Probability and Uncertainty in Economic Modeling

By Itzhak Gilboa, Andrew W. Postlewaite, and David Schmeidler

Journal of Economic Perspectives, Summer 2008

Economic modeling assumes, for the most part, that agents are Bayesian, that is, that they entertain probabilistic beliefs, objective or subjective, regarding any event in question. We argue that the formation of such beliefs calls for a deeper examinatio...

Peer Effects and Alcohol Use among College Students

By Michael Kremer and Dan Levy

Journal of Economic Perspectives, Summer 2008

This paper examines the extent to which college students who drink alcohol influence their peers. We exploit a natural experiment in which students at a large state university were randomly assigned roommates through a lottery system. We find that on aver...

Secrets of the Academy: The Drivers of University Endowment Success

By Josh Lerner, Antoinette Schoar, and Jialan Wang

Journal of Economic Perspectives, Summer 2008

University endowments have received much attention recently for their superior investment returns compared with other institutional investors. This study documents trends in college and university endowment returns and investments in the United States bet...

Recommendations for Further Reading

By Timothy Taylor

Journal of Economic Perspectives, Summer 2008

Notes

Journal of Economic Perspectives, Summer 2008

A Note on Different Approaches to Index Number Theory

By Matthijs van Veelen and Roy van der Weide

American Economic Review, September 2008

Testing for a Reference Consumer in International Comparisons of Living Standards

By Ian Crawford and J. Peter Neary

American Economic Review, September 2008

All-or-Nothing Monitoring

By Rui R. Zhao

American Economic Review, September 2008

A principal can observe both the output and input of an agent who works at a job involving multiple tasks. We provide a simple theory that explains why it may be optimal for the principal to use only an output-based incentive contract, even though the pri...

Commitment and Conflict in Bilateral Bargaining

By Tore Ellingsen and Topi Miettinen

American Economic Review, September 2008

Building on previous work by Schelling and Crawford, we study a model of bilateral bargaining in which negotiators can make binding commitments at a low positive cost c. Most of our results concern outcomes that survive iterated strict dominance. If com...

Leveling the Playing Field: Sincere and Sophisticated Players in the Boston Mechanism

By Parag A. Pathak and Tayfun Sönmez

American Economic Review, September 2008

Empirical and experimental evidence suggests different levels of sophistication among families in the Boston Public School student assignment plan. We analyze the preference revelation game induced by the Boston mechanism with sincere players who report t...

The Limited Influence of Unemployment on the Wage Bargain

By Robert E. Hall and Paul R. Milgrom

American Economic Review, September 2008

When a job-seeker and an employer meet, find a prospective joint surplus, and bargain over the wage, conditions in the outside labor market, including especially unemployment, may have limited influence. The job-seeker's only credible threat during bargai...

Trade Policy and Loss Aversion

By Caroline Freund and Caglar Ozden

American Economic Review, September 2008

We develop a political economy model where loss aversion and reference dependence are important in shaping people’s preferences over trade policy. The policy implications of the augmented model differ in three ways: there is a region of compensating pro...

The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited

By Marcus Hagedorn and Iourii Manovskii

American Economic Review, September 2008

Recently, a number of authors have argued that the standard search model cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies, given shocks of a plausible magnitude. We propose a new calibration strategy of ...

Distorted Gravity: The Intensive and Extensive Margins of International Trade

By Thomas Chaney

American Economic Review, September 2008

By considering a model with identical firms, Krugman (1980) predicts that a higher elasticity of substitution between goods magnifies the impact of trade barriers on trade flows. In this paper, I introduce firm heterogeneity in a simple model of internati...