From the Desk of the Managing Editor

[Symposium: 100 Issues of JEP]

By Timothy Taylor

Journal of Economic Perspectives, Spring 2012

Editing isn't "teaching" and it isn't "research," so in the holy trinity of academic responsibilities it is apparently bunched with faculty committees, student advising, and talks to the local Kiwanis club as part of "service." Yet for many economists, ed...

The Rise of Middle Kingdoms: Emerging Economies in Global Trade

[Symposium: International Trade]

By Gordon H. Hanson

Journal of Economic Perspectives, Spring 2012

In this paper, I examine changes in international trade associated with the integration of low- and middle-income countries into the global economy. Led by China and India, the share of developing economies in global exports more than doubled between 1994...

Putting Ricardo to Work

[Symposium: International Trade]

By Jonathan Eaton and Samuel Kortum

Journal of Economic Perspectives, Spring 2012

David Ricardo (1817) provided a mathematical example showing that countries could gain from trade by exploiting innate differences in their ability to make different goods. In the basic Ricardian example, two countries do better by specializing in differe...

Gains from Trade When Firms Matter

[Symposium: International Trade]

By Marc J. Melitz and Daniel Trefler

Journal of Economic Perspectives, Spring 2012

The rising prominence of intra-industry trade and huge multinationals has transformed the way economists think about the gains from trade. In the past, we focused on gains that stemmed either from endowment differences (wheat for iron ore) or inter-indust...

Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent Facts

[Symposium: International Trade]

By Jonathan Haskel, Robert Z. Lawrence, Edward E. Leamer, and Matthew J. Slaughter

Journal of Economic Perspectives, Spring 2012

This paper seeks to review how globalization might explain the recent trends in real and relative wages in the United States. We begin with an overview of what is new during the last 10-15 years in globalization, productivity, and patterns of U.S. earning...

Why Is the Teen Birth Rate in the United States So High and Why Does It Matter?

By Melissa S. Kearney and Phillip B. Levine

Journal of Economic Perspectives, Spring 2012

Why is the rate of teen childbearing is so unusually high in the United States as a whole, and in some U.S. states in particular? U.S. teens are two and a half times as likely to give birth as compared to teens in Canada, around four times as likely as te...

Why Was the Arab World Poised for Revolution? Schooling, Economic Opportunities, and the Arab Spring

By Filipe R. Campante and Davin Chor

Journal of Economic Perspectives, Spring 2012

What underlying long-term conditions set the stage for the Arab Spring? In recent decades, the Arab region has been characterized by an expansion in schooling coupled with weak labor market conditions. This pattern is especially pronounced in those countr...

Using Internet Data for Economic Research

By Benjamin Edelman

Journal of Economic Perspectives, Spring 2012

The data used by economists can be broadly divided into two categories. First, structured datasets arise when a government agency, trade association, or company can justify the expense of assembling records. The Internet has transformed how economists int...

Jonathan Levin: 2011 John Bates Clark Medalist

By Liran Einav and Steve Tadelis

Journal of Economic Perspectives, Spring 2012

Jonathan Levin, the 2011 recipient of the American Economic Association's John Bates Clark Medal, has established himself as a leader in the fields of industrial organization and microeconomic theory. Jon has made important contributions in many areas: th...

Retrospectives: The Introduction of the Cobb-Douglas Regression

By Jeff Biddle

Journal of Economic Perspectives, Spring 2012

At the 1927 meetings of the American Economic Association, Paul Douglas presented a paper entitled "A Theory of Production," which he had coauthored with Charles Cobb. The paper proposed the now familiar Cobb-Douglas function as a mathematical representat...

Recommendations for Further Reading

By Timothy Taylor

Journal of Economic Perspectives, Spring 2012

Front Matter

American Economic Review, May 2012

Foreword

By Chris Sims

American Economic Review, May 2012

Editors' Introduction

By William R. Johnson and Samantha Bennett

American Economic Review, May 2012

Does the Current Account Still Matter?

By Maurice Obstfeld

American Economic Review, May 2012

Simple Market Equilibria with Rationally Inattentive Consumers

By Filip Matějka and Alisdair McKay

American Economic Review, May 2012

We study a market with rationally inattentive consumers who are unsure of the terms of the offers made by firms, but can acquire information about the terms at a cost. In a symmetric equilibrium, the price set by firms is continuously increasing in the c...

Information Processing and Limited Liability

By Bartosz Mackowiak and Mirko Wiederholt

American Economic Review, May 2012

Decision-makers often face limited liability and thus know that their loss will be bounded. We study how limited liability affects the behavior of an agent who chooses how much information to acquire and process in order to take a good decision. We find t...

Information Choice Technologies

By Christian Hellwig, Sebastian Kohls, and Laura Veldkamp

American Economic Review, May 2012

Theories based on information costs or frictions have become increasing popular in macroeconomics and macro-finance. The literature has used various types of information choices, such as rational inattention, inattentiveness, information markets and costl...

Prospect Theory as Efficient Perceptual Distortion

By Michael Woodford

American Economic Review, May 2012

The paper proposes a theory of efficient perceptual distortions, in which the statistical relation between subjective perceptions and the objective state minimizes the error of the state estimate, subject to a constraint on information processing capacity...

Salience in Experimental Tests of the Endowment Effect

By Pedro Bordalo, Nicola Gennaioli, and Andrei Shleifer

American Economic Review, May 2012

We provide a novel account of experimental evidence for the endowment effect using the salience mechanism (Bordalo, Gennaioli, and Shleifer, 2011). The two-stage procedure implemented in experiments implies that the endowed good and other goods are evalua...