Book Reviews - Universidad de Salamanca | Universidad de Salamanca

Journal of Economic LiteratureVol XLIII (September 2005) pp 823-854

Book Reviews

823

A General Economics and Teaching

The Literary Book of Economics IncludingReadings from Literature and Drama onEconomic Concepts Issues and ThemesEdited by Michael Watts Wilmington DelISI Books 2003 Pp xxv 348 $2800 ISBN1ndash932236ndash02ndash3 JEL 2004ndash1195According to Webster (the dictionary not some

new internet blog) ldquoliteraturerdquo can refer to ldquowrit-ings having excellence of form or expression andexpressing ideas of permanent or universal inter-estrdquo or ldquothe body of writings on a particular sub-jectrdquo Alas virtually all the books reviewed in the

Journal of Economic Literature refer to the sec-ond definition The JEL reviews well over a hun-dred books a year and few if any pose as the sortof literature that would be read in say a collegeEnglish course The Literary Book of Economicsis the exception This book is actually about liter-ature (the first definition)

The author has perused great writings andfound wonderful examples of economic ideasPaul Krugman is a pretty good writer but if youwant to bring alive the idea of opportunity costbag the text book and read Robert Frostrsquos TheRoad Not Taken

Our training as economists gives us a lensthrough which to view many phenomena In this

Editorrsquos Note Guidelines for Selecting Books to Review

Occasionally we receive questions regarding the selection of books reviewed in the Journal ofEconomic Literature A statement of our guidelines for book selection might therefore be useful

The general purpose of our book reviews is to help keep members of the American EconomicAssociation informed of significant English-language publications in economics research We alsoreview significant books in related social sciences that might be of special interest to economists Onoccasion we review books that are written for the public at large if these books speak to issues thatare of interest to economists Finally we review some reports or publications that have significantpolicy impact Annotations are published for all books received However we receive many morebooks than we are able to review so choices must be made in selecting books for review

We try to identify for review scholarly well-researched books that embody serious and originalresearch on a particular topic We do not review textbooks Other things being equal we avoidvolumes of collected papers such as festschriften and conference volumes Often such volumespose difficult problems for the reviewer who may find herself having to describe and evaluatemany different contributions Among such volumes we prefer those on a single well-definedtheme that a typical reviewer may develop in his review

We avoid volumes that collect previously published papers unless there is some material valueadded from bringing the papers together Also we refrain from reviewing second or revised editionsunless the revisions of the original edition are really substantial

Our policy is not to accept offers to review (and unsolicited reviews of) particular booksCoauthorship of reviews is not forbidden but it is unusual and we ask our invited reviewers to discusswith us first any changes in the authorship or assigned length of a review

sp05_BookReview 82305 1203 PM Page 823

book Michael Watts extends that notion to thereading of literature There are so many cleverexamples that picking out just a few is fairly arbi-trary and doesnrsquot really do justice to the 300-pluspages of selected literature But Irsquoll try anyway

There are examples from the 1800s that ringtrue today An excerpt from Hard Times byDickens (1854) gives a wonderful example of thenegative externalities associated with pollutionDescribing Coketown he wrote ldquoIt was a town ofmachinery and tall chimneys out of which inter-minable serpents of smoke trailed themselves forever and ever and never got uncoiled It had ablack canal in it and a river that ran purple withill-smelling dye rdquo Dickens goes on to relatethese outcomes to the presence of equally well-described factories Bastiatrsquos Petition of theManufacturers of Candles (1845) simply nails theconcept of the gains from trade and (no offenseto Dixit and Norman) is really fun to read VictorHugo weighs in on principle agent problems in awell-chosen excerpt from Les Miserables (1862)On the other side of the Atlantic Mark Twainrsquoscomparison of real versus nominal wages in AConnecticut Yankee in King Arthurrsquos Court isanother classic

The book draws from twentieth century clas-sics too John Steinbeck makes multiple appear-ances Many of us learned that Steinbeck was aremarkable writer focusing on the injustices ofeveryday life Wrong He was a really good eco-nomics writer He illustrated the idea of publicgoods in his description of the national parks inTravels with Charley In Search of America themorality of making a killing in the futures marketin East of Eden and the concept of collusion inThe Pearl

Professor Watts does not only select examplesfrom the classics He has some wonderful exam-ples from books that you might have read on thebeach instead of in a classroom The tragedy ofthe commons is illustrated by Sebastian Jungerrsquosdescription of modern day commercial fishing inThe Perfect Storm In another excerpt from thatbook Junger gives a vivid description of the wagestructure on a fishing boat and how it varies withage and experience Itrsquos more fun than a Mincerregression anyday

John Krakauerrsquos Into Thin Air illustrates a fair-ly libertarian view of the role of culture in labormarkets when describing the impact of Everestexpeditions on the market for Sherpas and the

resulting changes in living standards for theSherpa communities While I find real value toreading what folks like Katz Krueger DiNardoand Card have to say about the structure ofwages and returns to education and computersand the like David Sedaris is a hell of a lot morefun The excerpts from Sedaris are hilarious andright on target

Throughout the book each passage is accom-panied by a short and to-the-point description ofwhy that particular passage is economicallyinformative It is a testament to the wisdom of hisselections that these descriptions are often only afew lines No trained economist has to search toohard to find the pearls of economic insight in theselections

This is a fun book If you read a lot yoursquoll enjoyrereading old friends in a new (economicallyinsightful) light If you donrsquot read much you canrandomly spout a few of the examples from thisbook and people will think that you are prettydarn well-read (Think of all the time yoursquoll save)

JIM LEVINSOHN

University of Michigan

B Schools of Economic Thoughtand Methodology

Wassily Leontief and InputndashOutput EconomicsEdited by Erik Dietzenbacher and Michael LLahr Cambridge New York and MelbourneCambridge University Press 2004 Pp xxi 396$8000 ISBN 0ndash521ndash83238ndash1

JEL 2004ndash1213Wassily Leontief passed away on February 5

1999 At the next meeting of the InternationalConference on InputndashOutput Techniques(Macerata Italy August 2000) a series of plenarysessions was held to honor his memory and hiswork organized by Anne Carter and the editorsThe nineteen papers in this book are primarilyfrom those sessions

The contributions to the volume are organizedinto two main parts ldquoReflections onInputndashOutput Economicsrdquo and ldquoPerspectives ofInputndashOutput Economicsrdquo The first part aims atgaining a deeper understanding of Leontiefrsquos lifeand work The second part is a collection ofresearch papers that cover a broad spectrum oftopics that have grown out of Leontiefrsquos originalresearch

824 Journal of Economic Literature Vol XLIII (September 2005)


Several key themes flow through Leontiefrsquoswork Certainly inputndashoutput analysis and empir-ical inputndashoutput modeling loom large HoweverLeontief is also remembered for his pioneeringwork in applying formal analysis to the teachingand thinking about economics Paul ASamuelsonrsquos (auto)biographical account of hisearly years as a disciple of Leontief at Harvardprovides a firsthand glimpse into this side ofLeontief Samuelson muses about what Leontiefcould have given us if he hadnrsquot been so preoccu-pied with inputndashoutput research in his middleand final decades

Another theme is Leontiefrsquos strong method-ological position on the use of ldquoobserved factsrdquo forscientific economics Several branches ofLeontiefrsquos work grew out of his desire to applyinputndashoutput analysis to policy issues such as thestudy of the effects of automation defense con-version environmental issues foreign and inter-regional trade and spatial and world modelsKaren R Polenske discusses each branch of thisempirical work in historical context Faye Duchinreviews the evolution of Leontiefrsquos model of inter-national trade beginning with early work as a neo-classical theorist a middle period establishing andreexamining the Leontief Paradox and the laterwork with the world model as a framework for thetheory of trade William H Miernyk discussesLeontiefrsquos influence on regional inputndashoutputanalysis and the incorporation of his dynamic sys-tem into regional models Emilio Fonteladescribes the genesis of the world trade model inthe context of UN interest stimulated by thework of the Club of Rome and as a logical com-bination of Leontiefrsquos interest in environmentalmodeling and foreign trade

Leontiefrsquos work and philosophy reveal theunmistakable influence of Joseph Schumpeter Inaddition to sharing an office corridor at HarvardLeontief and Schumpeter shared many researchinterests Parallels and paradoxes in this nearlytwenty-year relationship of Leontief andSchumpeter are revealed by Andrew Brody andAnne P Carter Two striking facts despite theirlong friendship Leontief outlived Schumpeter bynearly fifty years and almost by chance Leontieffound a gravesite next to Schumpeter ChristianDeBresson interviewed Wassily and his wife in1997 and that interview is published as the lastitem in the first part The interview is short butprovides good insight into Leontiefrsquos views on his

work in general and his relationship withSchumpeter in particular Many traces ofSchumpeter echo in Leontiefrsquos stress of theimportance of technology and innovation of dis-equilibrium and of the appraisal of Darwin as anintellectual driving force in economics

The second part of the book provides a sam-pling of empirical research that extendsLeontiefrsquos work With apologies to the authors ofother excellent papers a brief review such as thispermits comment on only a few of the papersThijs Ten Raa outlines a method of measuringtotal factor productivity growth in an inputndashout-put framework using shadow prices These shad-ow prices are solved by a linear program thatmaximizes utility subject to resource constraintsEdward N Wolff reviews the debate on theLeontief paradox and the factor content of tradeHe then presents a study of the RampD and invest-ment content of trade which uses eighty-five-sec-tor US inputndashoutput tables from 1947 to 1996Michael L Lahr and Erik Dietzenbacher (theeditors) team with Bart Los the recipient of thefirst Leontief Memorial Prize given at Maceratato investigate the question of the decline in laborcompensationrsquos share of GDP from 1982 to 1997They apply a special form of decompositionanalysis devised by Dietzenbacher which is ageneralization of a Fisher ideal index

Lawrence R Klein Vijaya G Duggal andCynthia Saltzman use a series of US inputndashout-put tables to build an annual industry datasetused to estimate KLEMI (KLEM plus ldquoinforma-tion servicesrdquo) production functions with an eyeto determining the influence of information tech-nology on productivity change in the UnitedStates Leontiefrsquos work in developing a worldmodel has been extended in the system of multi-sectoral macroeconomic models developed bythe Inforum group The study in this book byClopper Almon and Maurizio Grassini is an exer-cise using the Inforum international system inwhich they analyze how additional investmentaffects trade patterns for Italy

As Miernyk noted a biography of Leontief isyet to be written This volume should prove use-ful to those wanting to learn more aboutLeontiefrsquos life and work and the work of the peo-ple he influenced Many of the authors includingSamuelson Carter Duchin Polenske andAlmon were students of Leontief Several othersin this volume are students of students whom

Book Reviews 825


Wassily fondly referred to as his ldquointellectualgrandchildrenrdquo One thing the volume lacks is anintroduction which would summarize the papersand provide information on the authors and theirgenealogy from Leontief Also lacking are anypapers on inputndashoutput table compilation whichLeontief pioneered and for which the Bureau ofEconomic Analysis is deeply in his debtHowever when it comes to intellectual inheri-tance most economists since the mid-twentiethcentury must acknowledge their debt to Leontief

DOUGLAS S MEADE

Bureau of Economic Analysis

C Mathematical and QuantitativeMethods

Statistics Econometrics and Forecasting ByArnold Zellner Stone Lectures in EconomicsCambridge New York and MelbourneCambridge University Press 2004 Pp xvii163 $7000 cloth $2500 paper ISBN0ndash521ndash83287ndashX cloth 0ndash521ndash54044ndash5 pbk

JEL 2004ndash1220This slim but rich book is based on two first

lectures in a series honoring Sir Richard Stonethe distinguished pioneer in the development ofsystems of national accounts Both were present-ed in May 2001 one at the Bank of England andthe next one at the National Institute ofEconomic and Social Research (NIESR) inLondon

The hosts of the series chose wisely in entrust-ing these lectures to Arnold Zellner eminentstatistician and econometrician who is perhapsbest known as the foremost practitioner ofBayesian inference This is an overview of abroad range of issues and problems modelsmethods and results drawn from Zellnerrsquos life-long work in probability and statistics economictheory and measurement philosophy of scienceand forecasting

The starting point is the importance in scienceof the process of induction broadly defined toinclude not only measurement but also the useof theory for explanation prediction and deci-sion making The quality of data is critical as isthe tested performance of the models whichexcel by being both simple (as uncomplicatedand understandable as possible) and sophisticat-ed (compatible with the best available theories)

The core of the Bayesian approach is seen inthe provision of a formal model of learning fromthe data non-Bayesians lack such a model henceldquolearn informally from their datardquo (table 13 andtext p 23) The learning model has a basis ininformation theory probability theory and cer-tain axiom systems Its users express as a proba-bility the degree of confidence they have in ahypothesis their initial beliefs about the values ofthe parameters involved form the prior densityfunctions to be modified in light of the dataZellner stresses that this in itself is an importantadvantage of the formal learning from data buthe notes that ldquoBayesians use prior densities whereas non-Bayesians state that they do notand this has been the bone of contention formany yearsrdquo (p 30)

However the introduction of the Bayesianmethod of moments in the early 1990s made itpossible to apply the learning model to a numberof problems in regression and time series analysiswithout a prior density function Also bothBayesians and non-Bayesians use subjective prioror additional nonsample information eg in ran-dom effects models and random parameterregressions This is one point where recent liter-ature refers to a possible compromise betweenthe two approaches (p 32)

Zellner however foresees a different endingAlthough ldquoThe controversy has raged for morethan two centuries since the publication of Bayesrsquopaper in 1763 [it] is currently being resolvedin a paradigm shift in statistics econometricsforecasting and other fieldsrdquo (p 22) This is animportant and bold claim Although bolstered byseveral arguments and references to recent writ-ings it is still likely to be contested As usual withmajor scientific controversies its resolution ifever reached will be of great value and interest

Zellner argues persuasively that econometricmodels should be built and revised so as to workwell as tools for analysis and forecasting It oftenhelps to go from data to tentative models ratherthan always the other way round and it is alsowell to combine structural econometric modelingwith time series analysis (the preferred SEMTSAapproach) Zellnerrsquos ARLI (auto-regressive lead-ing indicator) model serves as an example Hereannual growth rates are used to forecast realGDP from its own lagged values for the pastthree years (the AR3 part of the model) and thelagged values of real money supply and real stock



prices (the LI part) Good one-year-ahead fore-casts for 1974ndash81 were obtained using 1954ndash73as the fitting period for eighteen countries inEurope and elsewhere (including the UnitedStates Canada Japan and Australia) Not onlyforecasts of the growth rates tested positively buteven forecasts of turning points did which israther rare (here the extension from AR3 toARLI helped critically)

In the various elaborations of the model theinitial least square forecasts with the ARLI modelare treated as the ldquodiffuse priorrdquo forecasts I likethis more extensive interpretation of the Bayesianapproach which may also prove much less con-troversial The prior information need not be justjudgmental it may be based on initial modelfindings which are likely to be more informative

The use of annual data is considered much lessappropriate for cyclical analysis particularly withrespect to the dating and forecasting turningpoints than quarterly or monthly data The rea-son is that it sharply reduces not only the irregu-lar but also the cyclical component of thevariables examined Some shorter cyclical move-ments will be suppressed in the annual dataHowever it is also true as noted later (p 95) thatin many countries the quality of seasonal adjust-ments and the quarterly data is poor whichargues against their use

Disaggregation by sectors that show differentfeatures of trends and cyclical movements maywell improve a modelrsquos performance significantlyThis insight is confirmed by Zellnerrsquos annualldquoMarshallian Macroeconomic Modelrdquo (MMM)for the US economy with demand supply and(importantly) entryexit of firms equations foreach of its eleven sectors

Lecture two (at the NIESR) is shorter and lessbroad in coverage than Lecture one (at the B ofE) but it is also more detailed and technical Themain objective is a full discussion of the SEMTSA approach and its application to macro-economic data (pp 81ndash109) The vector autore-gressive models both non-Bayesian andBayesian do not forecast well as they generallysuffer from overfitting too many intercorrelatedlagged input variables too few observationsMany large models contain equations for individ-ual variables that differ from the generally muchsimpler corresponding relations derived empiri-cally and perform worse Where this is the caseit is essential to find out why and learn how to

alter and improve the models An effective way todo it is ldquoto start simply and complicate if neces-saryrdquo (p 95) The progression from AR(3) toARLI and ARLIWI illustrates this procedureAdding the leading indicators to autoregressionimproved the model and its forecasts as didadding the world income variable

Further gains in form of reduced summarymeasures of forecast error were achieved by theuse of (1) time-varying parameters following ran-dom walk (2) pooling or shrinking proceduresutilizing the tendency of the individual elementsof a model to be distributed about a commonmean (3) disaggregation (by sectors for the ARARLI and MMM models for the United States)

Two concluding remarks First this reviewthough long for a text of 129 pages is far fromcomplete a much longer one would be needed tocover all the interesting aspects of this book filledwith information numerical and otherwise abouta variety of models estimates forecasts etcSecond one is left with an impressive image ofthe author He is an economist in full command ofhigh-level mathematics and econometrics Manyof his peers favor deduction and abstract modelsbut Zellner argues for more induction and small-er but smarter practical models And while theothers proceed from strong assumptions and shundifficult data and problems he advocates learningfrom data and forecasts systematically how tomake the models better

VICTOR ZARNOWITZ

The Conference Board

D Microeconomics

Economics for an Imperfect World Essays inHonor of Joseph E Stiglitz Edited by RichardArnott Bruce Greenwald Ravi Kanbur andBarry Nalebuff Cambridge and London MITPress 2003 Pp viii 702 $6000 ISBN0ndash262ndash01205ndash7 JEL 2004ndash0079This volume consists of a collection of papers

written for a conference to mark the sixtiethbirthday of Joseph Stiglitz by a group of his teach-ers students and coauthors The extraordinarilydistinguished list of contributors the broad scopeof the subjects covered and the uniformly highquality of the papers appropriately reflect andpay tribute to the enormous influence thatStiglitzrsquos ideas have had on the profession

Book Reviews 827


Reflecting the research interests of Stiglitz him-self the papers are divided into two groups Thefirst group of papers are on the subject of imper-fect information Stiglitz was of course awardedthe Nobel Prize in 2001 for his seminal contribu-tions to this area of research However Stiglitzalso made very influential contributions tomacroeconomics public economics and devel-opment and the second group of papers in thisvolume are on these subjects There is of coursea close connection between the two groups ofpapers the papers in the latter group generallystudy phenomena that can only be adequatelyexplained and understood by explicitly analyzingand modeling various information imperfectionsthat they are shaped by

For me one of the highlights of the volume wasa paper by Stiglitz himself entitled ldquoInformationand Change in the Paradigm in Economicsrdquowhich is described as a revised version of the lec-ture Stiglitz delivered in Stockholm when hereceived the Nobel Prize Stiglitz presents asomewhat chronological review of his mostimportant research contributions paying particu-lar attention to describing the issues and observa-tions that motivated his research and the state ofthe literature at the time he began his researchHe explains that much of his work was guided byhis own judgement that ldquoreal marketsrdquo appearedto behave in dramatically different ways than theldquotheoretical marketsrdquo described by models ofperfect information This nicely illustrates howin any scientific discipline there is a certain ten-dency for the prevailing orthodoxy to ldquoplay downrdquoinconsistencies of its own paradigm with the realworld and how truly important researchadvances often require the researcher to inde-pendently confront theory with evidenceYounger theorists currently engaged in their ownversions of this struggle should find Stiglitzrsquosaccount inspirational I also found it interestingthat Stiglitz identifies his interest in understand-ing the causes and consequences of unemploy-ment as being one of his main initial motivationsand one of the unifying themes of his work

My sampling of the thirty papers in this volumeleft me with the impression that the papers weregenerally extraordinarily readable and accessiblefor a general audience of PhD economists Muchlike Stiglitzrsquos own work most of the papers arevery well motivated by real economic problemsand phenomena and even in areas where I was

not a specialist I could develop a fairly goodunderstanding of what the economic issue wasand why it was interesting the nature of theanswer provided by the paper and the manner inwhich the result fit into the broader literature onthe subject My general sense was that the authorsgenerally chose to present slightly simpler modelsthat presented the main idea clearly instead ofstriving for the utmost in generality Especially inthe second half of the book many of the articlesare focused on discussing public policy issues andtheoretical issues related to them rather than onpresenting the results of a single modelTherefore the papers in the volume are muchmore suitable for browsing that would generallybe true of most academic papers

This collection of very high quality readablepapers by a very distinguished group of econo-mists together with Joseph Stiglitzrsquos ownoverview of the central themes of his researchwill provide worthwhile and interesting readingfor any PhD economist and is a fitting tribute tothe research contributions and career of JosephStiglitz

WILLIAM P ROGERSON

Northwestern University

What Price the Moral High Ground EthicalDilemmas in Competitive Environments ByRobert H Frank Princeton and OxfordPrinceton University Press 2004 Pp xii 203$2795 ISBN 0ndash691ndash00672ndash5

JEL 2004ndash0878Robert Frank has produced a steady stream of

thoughtful and provocative books throughout hiscareer These books have been accessible to boththe amateur and professional economist Theyhave challenged some of the well-worn assump-tions of professionals inspiring them to newresearch questions while giving a glimpse ofeconomic science to the interested amateur

Frankrsquos latest book What Price the Moral HighGround follows this pattern It is an easy readaccessible to all which draws on evidence from abroad range of fields The main theme is thatpeople often forsake opportunism to act for thesocial good and that in doing so not only makethe world a better place but often improve theirown lot in life as well In other words one can dowell by doing good In reading these argumentswe are often treated to a look back at many of thepoints first seen in Frankrsquos earlier books



The book is organized in three parts Part 1ldquoDoing Wellrdquo describes how pursuing the moralhigh ground can make someone better off Thefirst argument is that social conventions oftenhave the consequence of choking off oppor-tunism which then allows more efficientexchange Marriage for instance is a concessionto the near certainty that there is a better poten-tial spouse out there and a commitment is a nec-essary precursor to investment Harkening backto his Passions Within Reason (1988 W WNorton) Frank argues that nature has endowedus with sympathy and the ability to recognizethose who have lots of it It is this trait that makesus both seek and comply with social bondsThese in turn make sympathetic individualssought-after trading partners and prosperousindividuals

This part provides the newest and most inter-esting research in the book He describes forinstance how simple features of an interactionsuch as physical proximity (donrsquot stand too close)laughter (with not at) and ldquomere exposurerdquo(ldquohavenrsquot I seen you beforerdquo) can help us sortoutmdashoften unconsciouslymdashthose we should andshould not trust He argues that these features ofour psyche placed there by natural selectionmake it possible for virtual strangers to quicklyform bonds that benefit them both

He also asks whether this reasoning for individ-uals can extend to the firms Since firms do notcome endowed with the same subtle psychologi-cal advantages of individuals the ways sociallyresponsible firms can prosper largely build on thefact that firms hire and sell to people Firms cangain customers and attract employees who preferto do business with socially responsible firmsEfficiency wages and reputations for quality arealso ways firms can forsake short-run gains forlong-run profits

Part 2 is called ldquoDoing Goodrdquo This part arguesthat people enjoy behaving morally The highlightis the discussion of the Cornell EmploymentSurvey This followed Cornell graduates intotheir first jobs and identified huge compensatingdifferentials for jobs with low individual or socialvalue For instance working in a private law firmpaid three to four times more than public inter-est law While few would be surprised by thedirection of these results the correlationsbetween job satisfaction and pay were stunningand the pay differentials were staggering

The remainder of this part restates some of thepoints of Frankrsquos Choosing the Right Pond (1985Oxford University Press) by examining how muchwage compression might be due to status con-cerns versus relative fairness to workers We thenread a discussion of nonstandard motives forcharitable giving These motives have often beendiscussed in the margins of this literature withfew serious attempts to measure their impact rel-ative to policy variables such as the charitablededuction These include fundraising tactics suchas the selling of status the ldquopower of the askrdquoand the ldquoidentifiable victimrdquo phenomenon

Part 3 ldquoForging Better Outcomesrdquo looks tohow all this can be applied by developing socialnorms to promote the good effects of the phe-nomena outlined in parts 1 and 2 and to preventthe bad effects Again we revisit some earlierbooks by Frank by looking at how norms canreign in excessive behavior caused by individualsrsquoconcerns for relative position This includes sev-eral entertaining examples of ldquonerd normsrdquo andsocial disapproval of duals The book ends with asummary of Frank and coauthorsrsquo well knownwork on whether studying economics can molduncooperative behavior

This is an interesting and entertaining bookThe only disappointment is that Frank missedseveral opportunities to make his case more con-vincingly There are many recent articles fromeconomics psychology and brain science thathave pushed many of his ideas beyond the papershe cites In that sense this book will not be asgood a resource as it could be for professionals

What about the amateurs For them I worrythat the book may leave a mistaken impressionThroughout Frank states that his ideas are adeparture from mainstream economics Twentyyears ago this may have been true Now thanks inno small measure to works of Frank many of theissues hersquos raised are being confronted within themainstream Game theory experimental andbehavioral economics have all grown aroundideas of altruism sympathy inequality aversionreputations for fairness gift exchange happinessbounded rationality evolution neuroscience andthe like Granted economic models still assumeindividuals are ldquoself-interestedrdquo but that nolonger is consonant with assuming people areldquoselfishrdquo

JAMES ANDREONIUniversity of Wisconsin Madison

Book Reviews 829


E Macroeconomics and MonetaryEconomics

Asian States Asian Bankers Central Banking inSoutheast Asia By Natasha Hamilton-HartIthaca and London Cornell University Press2002 Pp x 215 ISBN 0ndash8014ndash3987ndash6

JEL 2003ndash0067The crises in Asian emerging market countries

in the late 1990s were a new sort of upheavalunlike those experienced in Latin Americancountries a decade before Economistsmdashparticu-larly the IMF sortmdashpreviously had focused onthe macroeconomic factors that precipitate suchcrises high government spending gaping currentaccount deficits indefensible exchange rate pegsincompatibility of exchange rate and monetaryobjectives and so on The Asian crises addedsome new things for international policy officialsto considermdashthe role of lax banking supervisionthe effects of currency mismatches on balancesheets the implications of unhedged forwardpositions the interrelationship betweenexchange rate depreciation and bankruptcymdashtoname an important few Thus the 1990s crisesadded some microeconomic factors to the IMFtool kit involving structure institutions andinstruments in banking and financial markets

This book adds another factor governingcapacity to the watch-list It is not enough for acountry to have the necessary laws and institu-tions if it does not possess the capacity with whichto implement those laws and run those institu-tions in a rational and orderly way It seems pret-ty obvious that good legal institutional structureis a necessary but not sufficient condition forgood de facto performance Hamilton-Hartreviews the central banks in three Asian coun-triesmdashIndonesia Malaysia and Singaporemdashandassesses the institutional governing capacity dur-ing their historical development and in the pres-ent day The authorrsquos goal is to demonstrate thatwith a better understanding of institutional devel-opment and governing capacity one could haveeasily predicted each countryrsquos experience duringthe crises of the 1990s

Chapter 1 lays out the bookrsquos main concernthat the policies of government cannot beassessed without understanding the institutionalstructure or surrounding political environmentHamilton-Hartrsquos focus is on central banks and on

their implementation of regulatory policy Sheclaims (p 6) that her book demonstrates thatldquowithin a fairly wide (but not unbounded) rangeof policies policy choice is less critical to deter-mining financial stability or economic sustainabil-ity than consistent implementation of declaredfinancial policyrdquo

Chapter 2 elaborates on the bookrsquos thesis Themodern bureaucracy is a formal rule-basedldquorational-legal authorityrdquo It possesses a recruit-ment process career path competitive remuner-ation decision-making structure hierarchysingle ultimate authority and a system to monitorand sanction behavior Although there is a neces-sary interaction between the modern bureaucra-cy and the private sector these relationships musthave structure and be subject to norms that dis-courage patronage and corruption The authorrsquosthesis could be stated thus For a given set ofpolicies the central bank with a high governingcapacity is more likely to realize its policy goals

Hamilton-Hart sees Singapore Malaysia andIndonesia as countries with a high medium andlow number of features of the modern bureau-cracy respectively translating into a high medi-um and low governing capacity She assumes thatthe central banks of Singapore Malaysia andIndonesia adopted essentially similar policies (orwere forced to adopt them by the IMF) with theresult that the countries ldquowith higher levels ofgoverning capacity are better able than thosewith lower governing capacity to maintain nation-al policy goals under conditions of capital mobili-tyrdquo (p 23) This is the essence of Hamilton-Hartrsquosanalysis which does not develop in any greatdepth the differences in economic circumstancesor policies across countries

Chapters 3 through 5 provide an historicalaccount of the development of government insti-tutions from the colonial period to the modernday focusing on organization structure andbureaucratic attributes of the central banksrather than on economic performanceHamilton-Hart demonstrates convincingly thatthe central bank in Singapore was a more organ-ized rationalized bureaucracy than the one inMalaysia which was in turn in far better shapethan the central bank in Indonesia Chapter 6reviews the experience with capital flows andefforts to monitor them in the three countriesThis discussion focuses on the increasing liberal-ization of capital flows over time and gives no



sense about the substantial rise in the magnitudeof gross inflows and outflows Chapter 7 looksagain at the structure and attributes of the threecentral banks since the late 1990s in order to relatethe bureaucratic features of these institutions tonational response to the crises and subsequenteconomic performance

Overall the book provides some interestingdetail on the historical development of centralbanks and their internal structures in threeSoutheast Asian countries The analysis largelyignores the vast literature written by economistsabout the origins of and responses to the financialcrises For instance this book might have beensubstantially better had Hamilton-Hart engagedin a sensible analysis of the economic situationsuch as the one in Paul Blusteinrsquos book TheChastening At its core this book talks little aboutthe actual economic policies and programs inSingapore Malaysia and Indonesia but draws aline from the internal workings of the centralbanks directly to a simplistic distillation of eco-nomic outcomes While there is no doubt thatHamilton-Hart is correct in her view that a betterfunctioning central bank can better implement itschosen policy the author credits the organiza-tional structure with too much For a readerinterested in the economic evolution of thesecountries and their performance during the1990s the analysis in this book is incomplete anddisappointing

ELLEN E MEADE

American University

F International Economics

In Praise of Empires Globalization and OrderBy Deepak Lal Houndmills UK and NewYork Palgrave Macmillan 2004 Pp xxvi 270$2495 ISBN 1ndash4039ndash3639ndash0

JEL 2005ndash0095Professor Lal opens his book that spans cen-

turies and covers ldquobig thinkrdquo topics like ldquoglobal-izationrdquo and ldquoempiresrdquo with a striking personalanecdote He recalls emerging from his hotel atthe now infamous Seattle WTO meetings to seeldquoa phalanx of bare-breasted women coming downthe hill carrying a sign reading lsquoVegan Dykesagainst the WTOrsquordquo This event among otherscauses him to wonder ldquowhy this benign process[globalization] had so inflamed the passionsrdquo

The book then argues with clear and forcefullogic that (1) empires are good for global order(2) global order is good for prosperity (3) empiresarise from a military advantage and (4) Americawill be militarily dominant for the foreseeablefuture and is therefore the only power that canshoulder the responsibility of empire and henceQED it would be good for global prosperity ifAmerica were to shoulder its responsibility forbeing a benign empire

The key threats to this desirable course ofevents are Americanrsquos views on foreign policy Tobe a successful prosperity inducing empireAmerica should (1) quit pretending it can be iso-lationist (2) shed the economically incorrectldquoreciprocalrdquo view of trade and open up unilater-ally as the British Empire did and (3) only try tochange the material beliefs of others in theworld not their cosmological beliefs The keycosmological belief that America should stop try-ing to export because it is not universal (partic-ular to ldquoEasternrdquo cosmologiesmdashIndia and China)and creates trouble is the notion of the equalityof man

Thatmdashto the limited extent that a wide rangingbook that covers the Mesopotamian empire therevolution in military affairs the moral basis ofthe state global warming the status of interna-tional organizations and much more can be put ina nutshellmdashis the book in a nutshell

I venture to guess the readerrsquos reaction to theopening anecdote of the book will determinetheir reaction to rest of the book becauseProfessor Lal makes no particular attempt topersuademdashhe pronounces often in the leastpersuasive way possible

If you are a whole hearted supporter of global-ization who imagines the typical opponent ofglobalization is a ldquopolitically correctrdquo extremistfueled by inflamed passions and hence chucklewith wry amusement at the story of bare-breast-ed vegan dykes then you will like this book Youwill buy it to display on your bookshelf or betteryet coffee table You will skim it to pick up argu-ments and factoids to throw into cocktail partychatter about globalization in the ldquorightrdquo (mean-ing left) circles This will probably end with yourspouse hustling you away before things get uglywhich is an added advantage of buying the booksince you donrsquot really like cocktail parties anyway

If you are a ldquovegan dykerdquo or a Green or anantiglobalization activist then you will also like

Book Reviews 831


this book This book will make you angry butwhere else will you be able to find globalizationand empire supported in such stark termsmdashafterall the foreign policy professionals and PR appa-ratus of the corporate machinery you are fightingwould never state so boldly that America is anempire (not even just a hegemon) and thatAmerica pretending to promote empire tospread universal values is a charade and shouldbe dropped (particularly that crazy Westernnotion of the equality of all people) so as to moreeffectively promote material well-being You willbuy this book to cull particularly egregiousquotes for your blog or web-site to show that theforces of globalization truly are nefarious as youever imagined

However if you are an economist concernedwith foreign policy issues surrounding globaliza-tion and donrsquot fall into one of those two groups Iam not sure you will either like or profit fromreading this book He asks the reader in the pref-ace to come ldquoshorn of preconceptionsmdashparticu-larly those characterized as politically correctrdquo andthen makes no effort to meet any reader halfwayHe presents one side of the argument often in astrident and not very empirically or theoreticallysatisfying way and then that as they say is thatPeople who disagree with him once his version ofthe facts are presented as quite obviously eitherself-interested ldquorent seekersrdquo or simply have anirrational ldquofaithrdquo and are not willing to ldquoshearrdquotheir preconceptions

He never does answer the very interestingquestion of why vegan dykes oppose globaliza-tionmdashand more importantly why among broadconstituencies in many polities around the worldldquoliberalizationrdquo or ldquoprivatizationrdquo have becomeaccusations He argues that ldquocosmological beliefsrdquoare difficult to change and he never does answerthe question of why Americans should sacrificetheir cosmological belief that the equality of manshould be a universal value in order to not conflictwith the lack of that cosmological belief in othersHe never addresses any of the economic argu-ments made against globalization (the danger ofraces to the bottom impacts on inequality possi-ble environmental consequences the risks of con-centration of market power) While I personallydo not find these arguments compelling manyeven many well-respected economists do andsome attempt at counter persuasion might havebeen in order

My sense was that this book was much morefun for Professor Lal to writemdashas it allowed himto air his pronouncements on a variety of topicsmdashthan particularly persuasive for anyone to read

LANT PRITCHETT

World Bank

Economic Governance in the Age ofGlobalization By William K Tabb New YorkColumbia University Press 2004 Pp vi 520$6950 cloth $2950 paper ISBN 0ndash231ndash13154ndash2 cloth 0ndash231ndash13155ndash0 pbk

JEL 2004ndash1259ldquoGlobalizationrdquo is the topic of the times

William Tabb Professor of Economics at QueensCollege suggests that the term has replaced ldquotheCold War as the unifying theme of a new erardquo (p40) Yet for Tabb ldquoin world historical terms theend of the Cold War is an overrated event Moresignificant is the business of the postwar econom-ic institutionsrdquo and the United Statesrsquos role in theprocess of shaping such governance bodies (pp102ndash03) Tabbrsquos perspective for his study of glob-alization is ldquocritical theory drawn from mainlinepolitical economy Gramscian and materialistunderstandings of the international politicaleconomyrdquo (p 1)

This book is about global state economic gover-nance institutions (GSEGIs) such as theInternational Monetary Fund (IMF) the WorldBank and the World Trade Organization (WTO)It considers democratic governance efficiencyequity growth development and power relationsin political processes Present-day globalization isin Tabbrsquos view a political outcome Critiques ofglobalization inspire this volume

Much of the first quarter of the book containsan articulation of Tabbrsquos views on current think-ing in international political economy He givesconsiderable attention to academic approaches toglobalization from the structural instrumentalliberal institutionalist to the constructionist witha coverage that spans a broad methodologicalspectrum from game theory to public choiceeconomics Tabb tells the reader where hestands rejecting for example a rational choiceframework in the understanding of GSEGIs Hisevaluation of contemporary analyses continuesthrough the volume

The text gets more specific however whenTabb discusses in depth concentric club forma-tion negotiation processes and ldquosoft lawrdquo



Concentric club goods are those from whichnon-club members ldquocan be excluded and gainonly if they accept membership termsrdquo Theoption of outsiders refusing membership is usu-ally too costly even though the newer membersreceive less ldquobenefits than the original onesrdquoClubs are started by the powerful (pp 142ndash43)And the powerful corporations set the basis fornegotiations The word ldquolawrdquo Tabb arguescomes etymologically from ldquobindingrdquoInternational law is binding on state interrela-tionships Yet much of the basis for GSEGIsaccording to Tabb is not formally embodied intreaty law but rather in negotiated ldquobroadlyworded agreementsrdquo This soft law process con-trasts with the precision of treaty law (p 154)Self-interest is fundamental to soft law enforce-ment (p 155) the self-interest of states and alsoof banks and corporations results in complianceHis analogy is to medieval and early modern lexmercatoria where in Tabbrsquos rendition localtransactions and long-distance trade were gov-erned by different rules with lex mercatoriapreeminent in the latter

Tabb explains that through the process ofldquoconcentric club formationrdquo private law soft lawis constructed and then ratified by internationalagreements ldquoThe GSEGIs are structured andadministered by such a processrdquo (p 35) GSEGIscan be created by soft law through internationalaccords molded in the process of concentric clubformation (p 68) This means the lineup of coali-tions among economic and political actors whichshape the GSEGIs (p 101)

Throughout the postwar period law has adjust-ed to the expansion of international business andinternational finance and Tabb believes that pri-vate-sector participants lead in the process ofchanging the soft law Thus to understand todayrsquosglobalization one must deal principally with pri-vate law and with private entities rather than (aspolitical scientists have done in the past) with sov-ereign states (p 105) ldquoOne of the functions of theGSEGIs is to take pressure off governments to actmore democraticallyrdquo (p 129) With the GSEGIsnational sovereignty is surrendered

From his own perspective Tabb retells thefamiliar stories of the Bank of InternationalSettlements (BIS) the IMF the World Bank theMarshall Plan and the origins of the EuropeanUnion and other regional groupings Tabb alsowrites of the less well-known GSEGIs the

International Organization of SecuritiesCommissioners International AccountingStandards Committee and InternationalAssociation of Insurance Supervisors (and theirrelationship with BIS) Within Europe theEuropean Round Table of Industrialists (ERT)and the European Round Table of FinancialServices (ERTFS) operate in the concentric clubpattern with influence on GSEGIs (p 128) TheUS Coalition for Service Industries for examplehas shaped the WTO rules (p 162)

Tabb does not see the IMF in terms of the mis-takes made but instead he perceives internation-al financial institutions ldquoas tools of transnationalcapital and the hegemonrsquos foreign policy priori-tiesrdquo (p 209) Quoting undated United Nationsfigures he argues that two thirds of world tradeinvolves at least one transnational corporationFor the latter ldquothe WTO is crucial not only totheir agenda of operating unhindered in all partsof the world but also for the definition and thenenforcement of intellectual propertyrdquo and ldquounfet-tered market accessrdquo (pp 311 375) Tabb main-tains that transnational corporations have adisproportionate influence on all contemporarytrade negotiations Needless to say he conceivesthis influence not in positive terms as enhancingglobal welfare and economic growth but as rep-resenting a loss of ldquodemocratic control and thevirtual exclusion of all other citizensrdquo (p 307) Theenforcement of GSEGIsrsquo decisions and disputeresolution procedures transcend the activities ofdemocratic sovereign states Tabb thinks theWTO (and other GSEGIs) assures the continuingsubordinate role of developing countries

Tabbrsquos concerns are broad He values equityover efficiency He has a chapter (chapter 11)devoted to environmental goals and humanrights Tabb insists GSEGIs must adopt socialvalues human rights are he states much moreimportant than property rights Tabb is con-vinced of GSEGIsrsquo inadequacies in dealing withthe serious chasm in income and wealth distribu-tion ldquostructural adjustment and related liberal-ization programs were central in producing arise in inequality globallyrdquo (p 203) Instead ofgreater ldquogrowth and stabilityrdquo during the decadeswhen ldquoneoliberalismrdquo has been dominant he seesdisappointing economic results

In 2005 we have GSEGIs that have (and havehad) a major impact on the world economyThese GSEGIs have grown in significance

Book Reviews 833


through the postndashWorld War II years KeyGSEGIs were founded by those who dreamed ofa better world One needs to recall the address byHenry Morgenthau US Secretary of Treasuryat the opening session of the Bretton WoodsConference in 1944 ldquoprosperity has no fixed lim-its the more of it that other nations enjoy themore each nation will have for itself Povertywhere it exists is menacing to us all The prob-lems of international exchange and of interna-tional investment are multilateral problemsto be solved only by multilateral cooperationrdquoNow over six decades later the GSEGIs areunder fire for not having developed the propermeans to ldquosolverdquo world problems for losing sightof their foundersrsquo goals Indeed the very phraseldquosolved only byrdquo is subject to question Economicconditions and viewpoints have changed Tabbjoins what has become a chorus of discontentover the impact of ldquoneoliberalismrdquo on theGSEGIs and on the global economy

MIRA WILKINS

Florida International University

G Financial Economics

Venture Capital Contracting and the Valuation ofHigh-Technology Firms Edited by JosephMcCahery and Luc Renneboog Oxford andNew York Oxford University Press 2003 Ppxxiii 512 ISBN 0ndash19ndash927013ndash9

JEL 2004ndash0950Given the limited share of the venture capital

sector in the world capital market it gets an awfullot of mindshare The best estimate is that thetotal value of extant venture-funded companies isabout $250 billion (down from its peak of $450billion in 2000) vs a value of $14 trillion in theUS public stock markets and an equal amount inthe rest of the world Buyout funds the other bigsector of private equity are easily triple the sizeof venture funds But venture funds get all theattention

One reason is that the successful outcomes inventure funds are sometimes raging Not onlydo the companies become social treasures andtheir names household words (eBay GoogleYahoo) but close to 20 percent of venture-fund-ed companies go public and for these the $54billion invested in them from 1989 to the pres-ent created companies worth 75 times this

amount (Disclosure My firm keeps track ofnumbers like this)

But this is not the whole story What happens tothe rest of the venture-funded companiesAnother 5 percent are acquired at a profit fortheir investorsmdashunambiguous successes About50 percent close worthless losing all the moneyinvested in them Ten years from the first roundof venture funding between 5 and 10 percent ofcompanies are still operating still private cover-ing ongoing costs but unlikely to return anythingto investors The remaining 15 percent areacquired but not at a gain for investors

Given this skewed distribution of returns howis venture investing overall Over the period1980ndash2004 the return is about 20 percent beforepaying the venture capitalist general partnersand after 16 percent Measured by the tools thathave become standard metrics for investing ven-ture is risky The beta for a diversified ventureportfolio is about two (20) (double the stockmarket) and the standard deviation of return onan annual basis is 45 percent (nearly triple thestock market) And yes values in these two mar-kets are correlated For the systematic risk thereturn on venture capital is just about where wewould expect it to be

So even the market for venture capital despiteits opacity and hyperbole is efficient McCaheryand Renneboogrsquos Venture Capital Contractingand the Valuation of High Technology Firmshelps us understand how this efficiency isachieved In this book of eighteen academicpapers the first five address the contracts used tofinance venture companies the incentives theycreate and how these lead to efficient outcomesThe next three discuss the social institutionsmdashmainly business law intellectual property lawand public support for research and develop-mentmdashthat foster the creation and growth of newcommercial ideas A useful addition to the inter-ested readerrsquos reading list on these topics wouldbe Ronald J Gilson and David M Schizerrsquos(ldquoUnderstanding Venture Capital Structure ATax Explanation for Convertible PreferredStockrdquo Draft of February 2002 Columbia LampEWorking Paper No 199 Stanford Olin LampEWorking Paper No 230) tax explanation for theuse of convertible preferred stock in venturefinancing

Two refreshingly empirical papers are includedin the next sectionrsquos five papers on the valuation



of high-tech firms They are at opposite ends ofthe market efficiency story In a piece of sciencewith considerable amusement valueCooperandRaucom document the premiumspaid for companies with dotcom names andrelate the E-ticket (eTicket) ride their interest inthe topic provided to themselves On the otherend John Hand provides a comforting reportthat for 601 biotech companies that did publicofferings 70 percent of the variance in value canbe explained by data from balance sheets andincome statements This result is consistent witha host of features of biotech venture-backed com-panies the flow of funding for biotech is far lesssubject to fashion than that of other venture-funded companies In the great boom year of late1999 to late 2000 when infotech venture fundingwas 500 percent above its smooth trend linebiotech funding was only 10 percent above trendAs a general matter biotech companies are moreprofessionally established more professionallyrun disclose more so far as they can withoutcompromise to their intellectual property andare less likely to be vilified on failed companywebsites when their ideas are not a success Andwhy not They are mainly started by PhD scien-tists The truth-seeking education of a scientistevidently carries over to how these companiestreat their investors and employees

The IPO markets are the focus of the last fivepapers Here you can learn about different coun-triesrsquo IPO institutions (United States UnitedKingdom Canada Israel France GermanyBelgium Spain and the Netherlands) moreabout venture contracting (lockups the impor-tance of inside ownership) and from EdwardRock in the least dry paper in the book readsome wise and instructive stories about the socialaspects of venture capital funding and investingthat help explain why Israeli companies behave asthey do

The papers in this book go a long way in pro-viding an education in how the venture capitalworld works today One set of issues not coveredis the reporting of venture outcomes and how thisreporting affects investor understanding of therisk of venture capital I have in mind especiallythat the reporting conventions used by generalpartners tend to make reported returns smootherthan the real economic returns which makesthem look both less risky and less correlated withother returns Does this cause investors to invest

more in venture than they otherwise would Inan efficient market for venture capital shouldthere be a return above that required for meresystematic risk to compensate for the illiquidityof venture investments Or perhaps institutionalinvestors see through but actually prefer opaquereporting These are all questions for anotherday I am confident they will eventually beaddressed There will be room for another bookor two

SUSAN E WOODWARD

Sand Hill Econometrics

I Health Education and Welfare

Governing Academia Edited by Ronald GEhrenberg Ithaca and London CornellUniversity Press 2004 Pp x 324 $3500ISBN 0ndash8014ndash4054ndash8 JEL 2004ndash0979I suppose I am typical of many faculty mem-

bers who have served as department or divisionchair elected member of the promotion andtenure committee representative to the Board ofTrustees and appointee to various presidentialcommittees One of my colleagues in the EnglishDepartment cites Othello when referring to hiscampus duties ldquoI have done the state some serv-ice and they knowrsquotrdquo Although I like to feel thatmy participation has improved campus condi-tions and I have undoubtedly shared rooms withkey decisionmakers part of me still wondersldquoWho does make critical decisions on campusrdquoOn one level Governing Academia offers a satis-fying glimpse in to the black box that is campusgovernance

This edited book offers a multidisciplinaryperspective on governance issues in Americanhigher education that is valuable to bothresearchers and practitioners in the field Theten chapters are divided in to four sectionsPresidents Trustees and External GovernanceInternal Governance and OrganizationGovernance in Practice and Challenges fromNonprofits and Nonlegal Influences Topics arecutting edge and the authors paint an intriguingportrait of the changing environment facinghigher education including the trend towarddecentralization particularly in budgetinggrowing unionization among graduate assistantsand non-tenure track faculty developing legalissues related to intellectual property and the

Book Reviews 835


growth of outside businesses on campus and thegrowth of for-profit universities The implicationsof these studies go beyond governance per sesince in the course of discussing how decisionsare made in academia the authors are forced toaddress broader issues such as what is the missionof an academic institution and how do the goalsof nonprofit and for-profit universities differWith a diverse set of authors from economics andbusiness political science education and thelaw this book makes a sizable contribution tomultiple fields

As an applied labor economist I was particu-larly drawn to the quantitative studies by GabrielKaplan (ldquoHow Academic Ships ActuallyNavigaterdquo) and Ehrenberg et al (ldquoCollectiveBargaining in American Higher Educationrdquo)For many academic institutions collective bar-gaining has played an integral role in determin-ing the locus of power on campus The chapterby Ehrenberg et al explores recent NationalLabor Relations Board decisions and the likelypositive effect on faculty unionization at privatecolleges and universities Although previousresearch indicates that collective bargaining hasa limited effect on faculty salaries the authorspoint out a lack of research as to how facultyunions influence systems of shared governanceThe authors also explore the implications ofgrowing unionization among academic staffmembers and graduate student assistants Theirempirical analysis of the effect of collective bar-gaining on staff salaries based on nine occupa-tions and 163 academic institutions is the firstIrsquove seen on this topic Findings suggest that rel-atively low-paid employees of public institutionsmay benefit more from organization than facultymembers Ehrenberg et al also document theexpansion of unionization among graduate assis-tants emphasizing a number of factors leading totheir growth such as the increase in mediannumber of years to degree and possible declinesin postdegree employment opportunities Againthey use a novel data set drawn from twenty-nineinstitutions to obtain estimates of the economiceffects of graduate student unions Their find-ings suggest that graduate unions have a limitedeconomic impact on universities which may bedesirable given that a large increase in costsmight reduce the size of graduate programs Theauthors also speculate about possible effects ofstudent organization on collegiality graduate

program atmosphere and quality and faculty-student relationships in general

Kaplan summarizes findings from a 2001 sur-vey of higher education governance The ques-tions cover specific actions such as practices ofthe President and Board methods of faculty hir-ing and the implementation of merit and post-tenure reviews as well as perceptions of sharedgovernance The latter were collected fromcampus administrators AAUP chapter officersand senior faculty In order to evaluate howcampus governance has evolved over timeKaplan compares the 2001 responses to findingsfrom a 1970 AAUP survey This chapter ispacked with interesting results but one unex-pected finding was that despite severe marketpressures administratorsrsquo and faculty membersrsquocommitment to shared governance has not erod-ed over time Relative to 1970 faculty participa-tion in governance rose in numerous decisioncategories Notably faculty members main-tained significant authority over the curriculumdegree requirements hiring and promotionsand shared governance arrangements

It is worth noting that some of the other con-tributors hold a more pessimistic view of the fateof shared governance Pusser and Turner(ldquoNonprofit and For-Profit Governance inHigher Educationrdquo) for example express someconcern that control has shifted away from facul-ty to professional administrators (Interestinglyas I write this the most current Chronicle ofHigher Education March 4 2005 features anarticle on Harvardrsquos president noting that someof his critics fault him for a ldquocorporate style ofgoverningrdquo) These authors note several areas inwhich for-profit and nonprofit academic institu-tions are converging Their description of facultymembers at for-profit universities who have noresponsibility for the curriculum and lack author-ity over hiring and promotion is chilling Theauthorsrsquo prediction that as nonprofit and for-prof-it governance structures converge their institu-tional missions might become more similar is anequally disturbing prospect

Overall the book has wide appeal and itforced me to consider many new topics andimpending issues in higher education Everyfaculty member would be curious to learn moreabout the relationship between presidents andtrustees especially an insiderrsquos view as providedby James Freedman By applying the research



on corporate boards to higher education boardsHermalin provides an interesting analysis ofCEO pay turnover rates and many potentialresearch areas Several chapter themes haveimplications outside of higher education suchas the obvious parallels between education andnonprofit versus for-profit health care organiza-tions Although some topics appear more rele-vant for universities there is still ample materialpertaining to other types of institutions In factLohmanrsquos cynical portrayal of the fate of mosttenured faculty at research universities(referred to as ldquoflotsamrdquo and ldquoemptiesrdquo) mademe prouder than ever to be associated with aliberal arts college

In conclusion Ehrenberg writes that there maynot be any single optimal design for a governancestructure ldquo[W]hat arises reflects the local historyof each organization and the very different con-straints it facesrdquo (p 277) Similarly Lohmannurges caution in altering campus structures thathave emerged to solve specific problems andneeds related to higher education After readingGoverning Academia I had a renewed apprecia-tion of the peculiarities of the academic sectorthe extreme variety in US higher education andhow the United States as a whole differs fromother countries in our lack of a centralized systemof postsecondary education Despite basic simi-larities across higher education institutions thechallenges facing higher education will be dealtwith on a campus-by-campus basis Moreover Iwas encouraged to persist in my own campuswideefforts to meet these challenges

DEBRA A BARBEZAT

Colby College

College Choices The Economics of Where to GoWhen to Go and How to Pay For It Edited byCaroline M Hoxby NBER Conference Reportseries Chicago and London University ofChicago Press 2004 Pp x 435 $6500 ISBN0ndash226ndash35535ndash7 JEL 2005ndash0185Interest in the higher education industry has

probably never been greater The combination ofthe largest economic returns to higher educationin more than a generation and growing inequali-ty in income distribution leads many to think ofour nationrsquos colleges and universities as potentialcontributors to equalization amidst various forcesleading to even further stratification This bookcontinues the proud tradition of NBER volumes

in which economists address a critical topic usingthe best methods our discipline has to offer

The most promising aspect of this effort is thatso many talented economists have turned theirattention to an area that has been historicallyneglected The volumersquos editor Caroline Hoxbyis a fine example Her paper with ChristopherAvery on how financial aid packages affect stu-dent choices is one of the most important in thebook It is encouraging that they discover thatstudents tend to behave rationally when con-fronted with a staggering array of price discountsFor instance most find a particular college oruniversity to be more attractive when the value ofthe aid package increases thereby reducing thenet price they face However an important find-ing is that some students are affected by how thisaid is labeled A number of institutions haveclearly discovered this already as they shrewdlyname some aid as a merit scholarship while it isactually distributed on the basis of need whileothers perhaps embarrassed by having enteredthe merit aid wars pretend that merit aid is actu-ally need-based It is important to have strongempirical evidence on the subject and this paperwill undoubtedly be much cited and discussed

Another highlight for me was the chapter bySusan Dynarski on state merit aid programsThese have proliferated since the early 1990swhen state legislatures as a result of the so-calledldquoassessment movementrdquo started encouragingpublic universities to do what they could to keeptop high school students from leaving the state toattend college Georgiarsquos HOPE scholarship pro-gram the best known of this ilk has been themodel other states have typically sought to repli-cate despite the fact that little has been knownabout its impact or that of its sister programs Notany more Dynarski finds that merit aid programsincrease the probability of college attendance byfive to seven percentage points shift studentsfrom community colleges to four year schoolsand generally reduce racial and ethnic atten-dance gaps Surely more research is warrantedbefore the best public policy can be enacted butthis paper provides an excellent start

It has long been observed that students areattracted to institutions with higher peer aptitudeYet are we really sure that peer effects existGordon Winston and David Zimmerman providea fascinating contribution to a rapidly growing lit-erature They find that student characteristics and

Book Reviews 837


behavior do indeed influence other students asstrong students raise the academic performance oftheir peers while weak students reduce it Theimplications of this line of enquiry range from themicro (how colleges should assign roommates) tothe macro (the overall efficiency effects of selectiveadmission)

A topic that has been studied in much moredetail is the impact of financial aid on collegepersistence Still Eric Bettinger provides newinformation on how Pell Grants affect ldquostop-outrdquobehavior In short aid increases persistence anespecially important fact in light of the paper bySarah Turner showing that while college atten-dance has been rising college completion hasbeen falling Surprisingly while todayrsquos highschool graduates are much more likely to enrollin college than was the case decades ago collegecompletion rates by the age of twenty-three areonly slightly greater than in 1970

There are many other intriguing papers in thevolumemdashtoo many to recount here Moreovereach of the chapters concludes with discussantcomments adding greatly to the understandingof the paper in question

As is always the case especially with empiricalwork a reviewer can quibble with some of theanalyses I think however that the errors hereare more of omission than commissionBeginning with the introduction Hoxby assertsthat ldquoit is not about attending college anymorerdquobut about which college a student selects andhow a student attends College choice is indeed amajor question but we should be careful not toassert that college access is no longer a relevantissue The facts suggest otherwise While virtual-ly all of the talented high school students in theupper ranges of family income attend college thesame is not the case with their less affluent coun-terparts And of course the probability of endingup as a ldquoless talentedrdquo high school student isstrongly linked with family background The bot-tom line is that a volume on various aspects ofcollege choice is a most welcome addition to theliterature but we should be careful not to assumeaway the important questions relating to accessthat so many economists among others havebeen grappling with over the years

In addition with all the interest in the eco-nomic return to higher education (not surprisinggiven what many four year colleges and universi-ties now charge) it would be really nice to figure

out which types of schools provide the greatestreturns Should a student accept a merit packageto attend a lower tier institution Is it worth it tosave some money and attend a public universityespecially if it is a flagship institution How doreturns from attending universities differ fromthose of liberal arts colleges Does it make sensefor a student to save money by attending a com-munity college before transferring to a four yearinstitution With a shockingly limited literaturevery little is known about the answers to thesequestions yet parents and their children facethese decisions every year

No volume can be expected to do it all Hoxbydeserves praise for assembling a stellar group ofeconomists and for editing a volume that is sureto serve as a valuable reference for scholars andpolicymakers Letrsquos hope that the higher educa-tion industry continues to intrigue talentedresearchers and that we can fill in more of thegaping holes in the literature

MORTON O SCHAPIRO

Williams College

Helping Children Left Behind State Aid and the Pursuit of Educational Equity Edited byJohn Yinger Cambridge and London MITPress 2004 Pp ix 404 $4000 ISBN 0ndash262ndash24046ndash7 JEL 2005ndash0191This edited volume examines key issues and

recent developments in education finance reformand how these policy decisions impact educationalopportunities for poor children The book is quitetimely given the proliferation of legal challenges tostate education finance systems in recent yearsalong with the increasing role states are requiredto play in education under the federal legislationNo Child Left Behind The volume provides anexcellent overview of education finance andshould be a valuable resource for policymakersscholars and educators

The first half of the book consists of four chap-ters that discuss general issues relevant to stateaid reform including the legal history and theo-ries underlying constitutional challenges to statefinance systems and the interaction betweenaccountability and finance reform The firstchapter which provides a clear and thoroughoverview of many key concepts is particularlyuseful Among other things the author discussesthe most common aid formulas describes theequity and adequacy objectives of finance



reform highlights the importance of accountingfor differential costs and reviews the issue ofdistrict supplementation of state aid Anotherchapter focuses on the limits of state aid policiesin general equilibrium emphasizing the role ofprivate schooling housing markets and nonfi-nancial inputs to the education process Whilethe partial versus general equilibrium distinctionis well-known to economists this discussionserves as a good introduction to noneconomistsand provides economists with useful benchmarkeffects based on simulations from a computableGE model

The second half of the book consists of fivechapters that examine in greater detail schoolfinance reforms in Kansas Kentucky MichiganTexas and Vermont These chapters provide awealth of background information that will beuseful to serious scholars but perhaps containtoo many details for the casual reader The mostattractive feature of these chapters is that theynot only provide details of the reforms them-selves but also examine the impacts on studentperformance as well as expenditures Given theinvariable space limitations however thisbreadth comes at the expense of depth Data andidentification issues for example are not as thor-oughly discussed as they would be in a rigorousprogram evaluation Finally it is worth notingthat the volume includes three appendices thatprovide a state-by-state guide to court decisionsand funding formulas which will be extremelyuseful to researchers

While this volume covers many central issues ineducation finance reform several topics deservegreater attention The first is the relationshipbetween financial resources and student out-comes A fundamental assumption underlyingeducation finance reform is that financialresources will improve student outcomes Whilecertainly plausible decades of research have sug-gested the link is not nearly as clear as one mightexpect There is evidence for example that pub-lic school districts do not hire the best teachersavailable to them and that the current pay struc-ture in most school systems results in compressedwage schedules that do not reward performanceAlso recent research on teacher labor marketssuggests that nonfinancial factors such as studentcharacteristics and geographic preferences play alarge role in teacher location and transfer deci-sions At best education finance reform can be

seen as a necessary but not sufficient condition forenhancing school quality A second issue is therelative costs and benefits of the different taxesutilized under alternative finance systemsFinance reform is one of the areas within educa-tion in which economists have considerableinsight to offer policymakers The chapter onMichigan briefly reviews evidence on the incen-tive effects of sales vs property taxes but the vol-ume would benefit from a more comprehensivediscussion of these issues Finally this readerwould have benefited from an interpretative sum-mary of the five case studies that integrated thelessons from these experiences into the existingliterature

Overall however this volume serves as anexcellent introduction for the causal reader and avaluable resource for the serious scholar or any-one who seeks to leave no child behind

BRIAN JACOB

John F Kennedy School of GovernmentHarvard University

J Labor and Demographic Economics

The Future of the Family Edited by Daniel PMoynihan Timothy M Smeeding and LeeRainwater New York Russell Sage Foundation2004 Pp xxvii 296 $3995 ISBN 0ndash87154ndash625ndash6 JEL 2005ndash0209Professor and politician Daniel P Moynihan

was among the first to observe and comment onincreases in out-of-wedlock childbearing in theUnited States In 1965 he wrote that the pro-grams of the federal government should bedesigned ldquoto have the effect directly or indirect-ly of enhancing the stability and resources of theNegro American familyrdquo (ldquoThe Negro FamilyThe Case for National Actionrdquo March 1965Office of Policy Planning and Research UnitedStates Department of Labor) Forty years latersingle-parent families have become more preva-lent across racial and ethnic groups both in theUnited States and in a large number of otherindustrialized nations In response policymakersare once again pointing to the role of the federalgovernment in strengthening the family It istherefore fitting that one legacy of Moynihanwho passed away in March 2003 is the volumeThe Future of the Family coedited with TimothyM Smeeding and Lee Rainwater This volume

Book Reviews 839


seeks to revisit these fundamental changes in fam-ily structure to explore their potential causes andto suggest a range of potential policy interventions

The Future of the Family is organized into fourparts Part 1 contains four chapters that summa-rize the existing literature on family structureDavid T Ellwood and Christopher Jencks reviewthe trends in single-parent families in the UnitedStates and examine evidence on possible causesof these changes Kathleen Kiernan describescross-country differences in unmarried cohabita-tion out-of-wedlock childbearing and the rela-tionship between the two Rainwater andSmeeding analyze the economic status of single-parent families across the United States andWestern European countries and examine therole that government policies play in removingthese families from poverty Wendy Sigle-Rushton and Sara McLanahan summarize the lit-erature on the effects of father absence on a widerange of child outcomes

In part 2 shorter chapters provide reactions tothe information summarized in part 1 Janet CGornick discusses possible relationships betweenthe unequal division of parenting responsibilitiesin intact families and father absence in single-parent families P Lindsay Chase-Lansdaleargues that a developmental psychology perspec-tive adds insight missing from purely economicdiscussions of the family Douglas A Wolf dis-cusses other changes in family structure that havelargely been ignored in the policy debate includ-ing childlessness and the increasing tendency ofindividuals to live alone

Part 3 provides three chapters on policy pre-scriptions Wade F Horn argues for a govern-mental role in promoting and encouraginghealthy marriages Will Marshall and Isabel VSawhill argue for policies that emphasize thereduction of teen childbearing as well as thedevelopment of family-friendly policies such aspaid parental leave and universal early learningprograms Nancy Folbre makes clear that policiesthat create incentives for paid market labor cancreate disincentives for caring home labor andargues for both individual and societal recognitionof the value of the latter

Finally the three essays in part 4 provide com-mentary on the earlier chapters Samuel HPreston argues for policies that support childrenregardless of their family type Frank FFurstenberg expands on this argument by making

the case that a broad set of policies aimed atimproving the well-being of children may have agreater effect on healthy marriages than policiesaimed directly at improving marriages IrwinGarfinkel points out the ways in which the USwelfare system relies on income-testing for thepoor and the effects that this income-testing mayhave on marriages

The Future of the Family is an important con-tribution to the literature on family structure andpublic policy and is likely to have a wide audi-ence The stand-alone chapters in part 1 providean up-to-date summary of the existing literatureon family structure reviewing what we know andmore importantly what we donrsquot know Thesechapters are likely to be very useful to studentsresearchers and policymakers

One strength of this volume is the provision ofa cross-country perspective In chapter 2Ellwood and Jencks note that researchers areunable to explain much of the rise in single-par-ent families in the United States However theeditors note in chapter 1 that single parenthoodhas increased dramatically not just in the UnitedStates but also in a large number of industrializedcountries with differing governmental policiesreligious traditions and social norms While theliterature that seeks to explain changes in familystructure often focuses on changes in the UnitedStates comparative analyses that highlight simi-larities and differences across countries may beable to shed some light on the relative importanceof various factors In addition the chapter byRainwater and Smeeding clearly illustrates thatgovernmental policies in other countries do a bet-ter job at mitigating the economic disadvantagesof single-parent families

This volume also explicitly lays out the manycomplexities encountered while thinking aboutfamily structure Ellwood and Jencks point outthat out-of-wedlock childbearing and single-par-ent families are not synonymous and that deal-ing with these two separate issues might requiredifferent policy prescriptions In their chapter onthe effects of family structure on child outcomesSigle-Rushton and McLanahan clearly illustratethe methodological issues that limit our under-standing of these effects including difficulties indistinguishing correlations from causal relation-ships The editors note that in a world wherehalf of the unmarried parents in the UnitedStates are biologically tied to at least one other



child in a different family unit governmentalpolicies to encourage marriage must grapple withthe complex realities of these families

In addition the volume raises provocativeissues that are not usually discussed in the cur-rent debate either by policy practitioners or byacademics Gornick points out that single parent-hood in the United States is almost always singlemotherhood and argues that the gendered divi-sion of labor within married couple householdswhere fathers are often less involved in their chil-drenrsquos daily activities may be related to father-lessness in single-parent families Wolfrsquosdiscussion of the increasing incidence of child-lessness is revisited by Preston who argues thatwithout the out-of-wedlock childbearing thatoccurs in the United States rather than havingfertility rates at the replacement level (21 birthsper woman) our fertility rates would be closer to14 births per woman In that counterfactualworld it is likely that our policy concerns withrespect to the family would be closer to those ofcountries like Spain and Italy with a focus onvery different issues

In sum The Future of the Family clearly andcarefully summarizes the existing literature anddraws important and interesting connectionsacross chapters It is likely to become an impor-tant volume for those interested in the linkagesbetween family structure and public policy

LUCIE SCHMIDT

Williams College

L Industrial Organization

On Hollywood The Place the Industry By AllenJ Scott Princeton and Oxford PrincetonUniversity Press 2005 Pp xiii 200 $3950ISBN 0ndash691ndash11683ndash0 JEL 2005ndash0259This bookrsquos cover states ldquoOn Hollywood will

appeal not only to general readers with an inter-est in the motion picture industry but also toeconomic geographers business professionalregional development practitioners and culturaltheorists as wellrdquo

Notably absent from this list at least to an econ-omist writing a book review is the economics pro-fession Nonetheless overall I thoroughly enjoyedreading this book and happily wholeheartedly rec-ommend it to all those with a specific interest inthe industry with one significant exceptionmdashthe

first chapter Before progressing to say more pos-itive things let me dispose with the exceptionmdashasI suggest most readers do Among other thingschapter one considers whether or not ldquoculturalproducts whose origins lie in business-orientedsystems of supply can have any genuine merit asexpressions of artistic or intellectual accomplish-mentrdquo (p 3) To the authorrsquos credit he does con-clude that capitalism is in fact a ldquolegitimate site ofcultural achievementrdquo so ldquophewrdquomdashI suppose wecan go to watch Hollywood movies after all with-out wearing trilby hats sun glasses and raincoatsbut one cannot help but think that the argumentover whether or not capitalism was always a badthing has been recognized as a bizarrely extremeand superficial debate for at least many decades

Beyond the first chapter the book actually doeshave some interesting content as well as animpressive scope It begins with a fast movinggeneral discussion of the early growth of theHollywood motion picture industry in chaptertwo focusing primarily on the question of why itis that Southern California became so importantas the hub of movie production the main themeof the book Although much of the introductorymaterial is well known there are some nice orig-inal contributions such as a mapping of the loca-tions of all the motion picture productioncompanies in Los Angeles in 1915 and 1930

The core of the book is in chapters 4ndash8 Firstthere is a detailed description of TV productionand movie production sectors (chapters 4 and 5respectively) the digital effects industry (chapter6) and local to Hollywood labor markets (chapter7) Chapter 8 examines the trends in the globaldistribution of films Each of these chapters con-tains real new contributions and are undoubtedlythe more interesting chapters of the book Forexample chapter 5 contains a discussion of stu-dios and the author presents various pieces ofnewly collected useful informationmdashsuch asmaps describing data on the square footage ofsound-stages across Los Angeles and the geo-graphic distribution of set design and construc-tion firms in LA In chapter 6 the results of amail survey of inputs and outputs of digital effectsfirms (127 respondents from 780 targeted firms)is reported In chapter 7 data on the residentiallocations of all the member of IATSE Local 80(Studio Grips and Crafts Service) and also theWriterrsquos Guild are plotted (It turns out that writ-ers like to live in cities while studio grips are

Book Reviews 841


more highly dispersed Oh and not even writerswill live in South-Central Los Angeles)Similarly interesting are maps of the locations ofagents casting directors and managers in LosAngeles that are presented Clearly a great dealof work went into putting together these newdatasets from industry sources and each pro-vides an interesting perspective on a complexand multifaceted industry

The core question Scott asksmdashwhat are thecauses of success in mature industriesmdashis one ofthe central questions of both Strategy andIndustrial Organization and so this book shouldbe of interest to students of each of them Assuch it is very much in the tradition of analysisby authors such as Stephen Klepper Perhapshowever the reason for the authorrsquos reticence tosay the book is of interest to economists is thatlittle of the analysis refers to modern under-standing of the determinants of market struc-ture Indeed neither the literature on static ordynamic theories of market structure arereferred to although the author does get some-what excited by average cost curves in chapterthree a la Viner (1931) In particular there is nodirect discussion of either exogenous or endoge-nous sunk cost theories of market structure(Sutton 1998) and nor is there any link toancient or modern theories of the dynamics ofmarket structure from Gibrat (1931) to Simonand Bonini (1958) Jovanovic (1982) HopenhaynH (1992) and Erickson and Pakes (1995) see forexample the review in Sutton (1997)

Ultimately I think Scott tries to do too muchsacrificing depth for scope For instance whilecertainly interesting the analysis presenteddoesnrsquot actually provide much analysis towarddisentangling the various reasons for economicunits being close together Do the bulk of writ-ers live in central LA because thatrsquos wheredemand is because theyrsquore a particular subsetof people who donrsquot like to commute becausetherersquos something about writers (eg on aver-age theyrsquore poor) or becausemdashas the bookemphasises there are agglomeration externali-ties that mean there are returns to living neareither other writers or the studios The basicand striking fact is clearly and compellinglyestablishedmdashthat 933 percent of members ofthe Writerrsquos Guild live within fifteen miles ofthe intersection of Beverly and La CiengaBoulevards in Los Angelesmdashbut the analysis of

the causes of this carefully established fact islimited As such I find the analysis in sayKlepper and Simon (2000) on the evolution ofan industry and the determinants of successultimately more enlightening

The author does however show a remarkabledepth of knowledge of the various industriesstudied and for this reason alone there is plentyof anecdotes and facts about the industry to makethe book useful In addition the author makesuse of most industry data sources and so the bookwill be invaluable for people interested in theindustry as a collection of references particularlyfor publicly available datasets

In the final chapter we come dangerously closeto cultural studies again concluding among otherthings that a strict interpretation of the Americanfilm industry as pure cultural imperialism ldquoseemstoo bluntrdquo Whorsquod have thought it While suchdiscussion is distracting overall the author takesmeasured and reasonable positions I finish byraising what was clearly the most controversialstatement in the entire book the claim that ldquoIfthe French can be induced to eat McDonaldrsquoshamburgers washed down with Coca-Cola thenAmericans can be induced to watch Frenchfilmsrdquo (p 171)

REFERENCES

Ericson Richard and Ariel Pakes 1995 ldquoMarkov-Perfect Industry Dynamics A Framework forEmpirical Workrdquo Review of Economic Studies62(1) 53ndash82

Gibrat R 1931 Les Ineacutegaliteacutes eacuteconomique applica-tions aux Ineacutegaliteacutes des richesses aux populationsdes villes aux statistique des familles etc drsquoune loinouvelle la loi de lrsquoeffet proportionnellerdquo ParisLibrairie du Recueil Sirey

Jovanovic Boyan 1982 ldquoSelection and Evolution ofIndustryrdquo Econometrica 50(3) 649ndash70

Klepper Steven 1996 ldquoEntry Exit Growth andInnovation over the Product Life-Cyclerdquo AmericanEconomic Review 86(3) 562ndash83

Klepper Steven and Elizabeth Graddy 1990 ldquoTheEvolution of New Industries and the Determinantsof Market Structurerdquo RAND Journal of Economics21(1) 37ndash44

Klepper Steven and Kenneth Simons 2000 ldquoTheMaking of an Oligopoly Firm Survival andTechnological Change in the Evolution of the USTire Industryrdquo Journal of Political Economy 108(4)728ndash60



Hopenhayn Hugo 1992 ldquoEntry Exit and FirmDynamics in Long Run Equilibriumrdquo Econometrica60(5) 1127ndash50

Simon Herbert and Charles Bonini 1958 ldquoThe SizeDistribution of Business Firmsrdquo AmericanEconomic Review 48(4) 607ndash17

Sutton John 1997 ldquoGibratrsquos Legacyrdquo Journal ofEconomic Literature 35(1) 40ndash59

Sutton John 1998 Technology and Market StructureTheory and History Cambridge MIT Press

Viner Jacob 1931 ldquoCostrdquo in Encyclopedia of theSocial Sciences Edwin R A Seligman and AlvinJohnson eds New York Macmillan 275ndash78

PETER DAVIS

London School of Economics

Golfonomics By Stephen Shmanske SingaporeRiver Edge NJ and London World Scientific2004 Pp xviii 312 ISBN 981ndash238ndash677ndash7

JEL 2004ndash1397Golfonomics is one of the best books about the

economics of sports among the dozens I haveread It is accessible with only rudimentary train-ing in economics and statistics but is thoughtfuland sophisticated Even those who specialize inthe economics of sports will learn new and unex-pected things from this nice volume It coverstwo basic subjectsmdashthe economics of golf coursemanagement and the economics of professionalgolf tournaments

The appendix to the introduction is one of thebest parts of the book It explains why the con-struction cost of a municipal golf course is not abenefit but rather a cost to the communitybecause resources used to build it have alterna-tive uses that are sacrificed when the course isbuilt Nor does positive cash flow from a courseindicate that golf is the best use of land becausean even higher cash flow might accrue from analternative use eg an oil well or high rise apart-ments Moreover cash flow ignores externalitieswhich presumably are what attract the involve-ment of a municipality in an otherwise privatesector activity in the first place

Shmanske has collected original data to esti-mate critical parameters Much of the book isbased on a survey of forty-six San Francisco areagolf courses he conducted in 1994 From analy-sis of this sample we learn that the demand forrenting golf carts is greater the hillier is acourse insensitive to course length and inelastic

at existing prices suggesting that cart rentals arepriced too low to maximize revenues Sincesome of the forty-six courses are operated bymunicipalities this is not too surprisingMoreover low cart rental prices can foster prof-it maximizing if carts speed play sufficiently toenable the collection of additional greens feesthat exceed the revenues sacrificed by pricingcart rentals too low

In a clever chapter designed to ferret out whichamong six possible price discrimination schemesexplains the observed variation in greens feesShmanske identifies third-degree discriminationas the likely basis because the variation in priceacross courses is positively correlated with rev-enues but unrelated to the number of roundsplayed (quantity) This pattern is inconsistentwith the five other types of discrimination that heconsiders Third-degree discrimination distin-guishes among groups of golfers with differentelasticities of demand for example retired versusemployed golfers who can be separated bygreens fees set at different levels for weekday andweekend play

In one of the more innovative chapters in thebook Shmanske estimates the marginal cost andmarginal revenue of caring for a golf courseCombining financial data obtained from thecourses with subjective ratings of course condi-tion by over 900 golfers he interviewed at the var-ious courses he estimates marginal cost of anadditional point on a subjective index of coursecondition as $194000 per year Maintenancecosts are higher on larger courses and perhapssurprisingly on courses with smaller greens (thatrequire more attention because the cup cannotbe moved around sufficiently to let damaged por-tions of the green heal naturally) He estimatesthe marginal revenue of course condition as$266000 per index point not significantly differ-ent from estimated marginal cost implying main-tenance decisions among course superintendentsthat efficiently balance marginal benefits (ierevenues) against marginal costs

Shmanske conducts an intriguing analysis ofslow play He shows how course design thatcauses bottlenecks and starting time intervalsthat are too short can cause delay patterns thatappear to result from lagging play of golferswho in fact are moving at a pace necessary tomaintain the initial time interval between them-selves and the group ahead of them Shmanske

Book Reviews 843


shows how customs such as ldquocalling-uprdquo thoseon the tee of a Par 3 hole (ie those on thegreen asking those on the tee to start play)before putting can help to overcome somecourse design flaws

A description of professional golf tournamentsexplains that the essence of the ProfessionalGolfers Association is a cartel designed to pro-duce a monopoly tournament each week Thisensures that the high bidder for television broad-cast rights will not face competition from analternative tournament thereby boosting theTourrsquos broadcast rights revenue and in turnpurse money available to the players

Using data provided by eleven professionalgolfers about the practice time they devote to sixplaying skills eg driving putting Shmanskeestimates that an hour of practice has the great-est effect on putting and not surprisingly prac-ticing putting has the largest payoff intournament winnings He discovers that thevalue of the marginal product of practicing put-ting is higher than the value of the marginal prod-uct of practicing other skills which suggests thatthe professional golfers do not allocate their prac-tice time efficiently Their allocation may occurbecause golfers enjoy practicing putting the leastHe also estimates that putting skill depreciatesmuch faster than driving skill and thus a profes-sional golfer coming back from a winter layoffshould hit the putting green more frequentlythan the driving range at the beginning of theseason This advice may not apply equally to ama-teurs however whose goal may be simply toavoid humiliation when driving off the first tee

Using a Oaxaca decomposition to analyze themarginal revenue product of skills of male andfemale professional golfers Shmanske finds noevidence of gender discrimination in spite of themuch higher purses offered at menrsquos than atwomenrsquos tournaments His results indicate thatonce controls are introduced for relative skill lev-els female golfers actually earn more than malegolfers although the difference is not statisticallysignificant

Because it builds a solid foundation andexplains the reasoning behind the arguments ineach chapter Golfonomics could form the basisfor a niche course on the economics of golf thatmight be suitable for those institutions that stillhave a short term in January or May This bookwill capture the attention of both economist-

golfers and those more generally interested inclever applications of microeconomics andcareful estimation of parameters

JOHN J SIEGFRIED

Vanderbilt University

N Economic History

The Not So Wild Wild West Property Rights onthe Frontier By Terry L Anderson and Peter JHill Stanford Stanford University PressStanford Economics and Finance 2004 Pp xii263 $2495 ISBN 0ndash8047ndash4854ndash3

JEL 2004ndash1430According to the movies the nineteenth-centu-

ry American West was a place where settlersfought Indians cattlemen battled sheep men forcontrol of the range and the strong exploited theweak This picture enters into serious discussionswhen the West is used as an example of what hap-pens when a government is too weak or distant toenforce laws or create property rights In thislively polemical book professors Anderson andHill argue that the true history of the West wasvery different They find that voluntary privateagreements created many efficient institutionswhile government policies often dissipated rentsor encouraged violence

The book first gives a theoretical frameworkaimed at nonspecialists based on the ldquonew insti-tutional economicsrdquo Property rights and otherinstitutions are needed to organize a society touse resources efficiently and these can be provid-ed by private agreement or government action Agovernment however may also dissipate rentsThis is because the government can dole outproperty rights based on political calculationsThe Homestead Act of 1862 for example grant-ed 160 acre homesteads to settlers for a zeroprice if they cultivated and lived on the land forfive years This led to a wasteful race to settleland on the frontier before it was economicallyefficient By contrast in a small voluntary groupldquoinstitutional entrepreneursrdquo will often createinstitutions that allow resources to be used effi-ciently to increase the grouprsquos wealth A smallgroup however may choose to raid its neighborsand take what it wants by force rather to engagein trade peaceful trade

Anderson and Hill give examples to supportthe argument that cooperation was common in



the American West These include (1) the cre-ation of institutions by American Indians to cap-ture gains from trade and specialization (2) theorganization by of the trade in beaver pelts (3)the creation by miners of new property rights togold and silver in California and Nevada (4)creation by miners and farmers of prior appro-priation water rights better suited to the aridWest than common law riparian rights (5) theorganization by migrants of wagon trains to crossthe plains and (6) the creation of cattlemenrsquosassociations to define and enforce rights to cat-tle and grass Anderson and Hill summarizerecent research that uses a public choiceprop-erty perspective and reinterpret some previoushistorical work

Of course there were problems as well as suc-cess stories Anderson and Hill argue that gov-ernment policies actually made some problemsworse For example they blame the federal gov-ernment for making warfare between whites andIndians more common after 1865 Prior to theCivil War Indian wars were fought by local mili-tias paid by the local community After 1865 fed-eral government patrolled the West with aprofessional army which shifted the cost ofdefense to taxpayers in other parts of the countryFreed of the full cost of a possible war settlerscould become more aggressive in pushing ontoIndian land As predicted there are significantlymore battles with Indians after 1865 After theend of hostilities in the 1880s Indians weresupervised by a bureaucracy primarily concernedwith its own interests which lead to policies thatinhibited successful agriculture

Other problems were caused by a failure torecognize existing property rights When sheepherders moved their flocks on to the GreatPlains cattlemen fought to keep the sheep off therange The conventional view is that sheep andcattle could not share the same pasture and thiscaused the conflict Anderson and Hill argue thatthe real problem was that sheepherders movedon to grazing land where cattlemenrsquos associationshad already established property rights withoutcompensating the cattlemen

They find that some alleged problems werenrsquotreally problems at all The destruction of thebison herds after the Civil War is often picturedas a wasteful ecological disaster Bison howeverare difficult to raise commercially and not veryvaluable They argue that killing bison for their

hides simply removed a pest and made the grassavailable for more valuable cattle ranching

A goal of the book is to encourage policymakersto apply lessons from the West to modern situa-tions as they admit this will be trickyInstitutional entrepreneurs may form armedbands and try to control territory rather thanorganize peaceful endeavors There were banditsin the West of course but none controlled largeterritories Why not A reason is that the federalgovernment ultimately had a monopoly on forceNo one could expect to control territory with aprivate armed forcemdashbecome a warlordmdashforvery long so there was no reason to even tryAnother factor that aided private action was thatpeople in the West often moved from place toplace and were free to join new groups Minerscame from many different places during the goldrush in California In this fluid situation minerswere able to join together to create and enforceproperty rights to gold claims Creating andenforcing these property rights would have beenmuch more difficult if the miners had alreadybeen members of established rival groups basedon ethnic or religious affiliation Further manywhite settlers were familiar with common lawproperty rights and democratic voting which isnot true in many recent cases This commonknowledge made it easier to devise and imple-ment new institutions based on these principlesHowever even if it will not be easy to apply les-sons from the West to new situations Andersonand Hill do a good job of arguing that privateinstitutions often worked well and peacefully inthe ldquoWildrdquo West

LEONARD A CARLSON

Emory University

O Economic DevelopmentTechnological Change and Growth

The Vietnamese Economy and its Transforma-tion to an Open Market System Edited byWilliam T Alpert Foreword by Bui DiemArmonk NY and London Sharpe 2005 Ppxii 276 $8495 ISBN 0ndash7656ndash 0669ndash0

JEL 2005ndash0377

Economic Growth Poverty and HouseholdWelfare in Vietnam Edited by Paul GlewweNisha Agrawal and David Dollar Regional and

Book Reviews 845


Sectoral Studies Washington DC WorldBank 2004 Pp xiv 628 $3000 paper ISBN0ndash8213ndash5543ndash0 JEL 2004ndash1449Over the last fifteen years Vietnam has been

one of the faster growing nations in the worldwith a twelve fold increase in exports healthyimprovements in social indicators and signifi-cant declines in poverty Since 2000 it haspassed an Enterprise Law that makes setting upformal private businesses much easier leadingto over 150000 new firms The private domesticsector will produce more industrial output nextyear than the state sector Vietnam signed abilateral trade agreement with the United Statesin 2001 leading to a six-fold increase in exportsto the United States in four years and it willsoon join the WTO It is decentralizing its pub-lic finances to a significant extent giving moreresponsibility to provinces Internet use doubledlast year and now the share of those using theInternet is similar to China Yet its stock marketis weak and small and its banks remain largelyinefficient and state-dominated State guidedinvestment accounts for over half of total invest-ment and is poorly directed and mired in excesscosts Corruption is high and perhaps increas-ing and land prices rival those in Japan eventhough GDP per capita is about $600 versusover $30000 in Japan (Land attracts fundsbecause financial alternatives are so poor)Educational quality is thought by many to bedangerously low but special schools turn outMath Olympic winners Political and religiousfreedoms are limited but its press is said byobservers to be livelier than that of richerASEAN members

The two new books on Vietnam that came outare both useful and complimentary additions tothe literature on Vietnamrsquos economic growthOne edited by William Alpert is a broad pre-scriptive survey of Vietnam with chapters on lawhistory and culture as well as tax fiscal financeand trade and investment policies The other aWorld Bank publication mines the two livingstandards surveys of 1992ndash93 and 1997ndash98 Butboth illustrate the problems of publishingNeither refers to many developments in the lastfive years This does not negate their valuemdashindeed there is much of value in both of themBut if someone wants to understand the generaldrift of twenty-first century events in Vietnamtoo much is left out The record of the 1980s and

1990s is important and needs to be analyzed Butmuch has happened since the Asian Crisis endedand books recently published should perhaps beable to incorporate more of these importantrecent changes (Selected chapters such as theBanking Reform and the Foreign Investmentand Trade chapters in the Alpert book do extendto 2002 but the general perspective is one thatstops earlier Likewise the World Bank intro-ductory chapter is somewhat updated but notthe others in spite of a newer 2002 LivingStandards survey being available that could havebeen incorporated in a summary chapter)

The shorter book (276 pages) is edited byWilliam Alpert and is written by eacutemigreacuteVietnamese and western experts Many of the lat-ter had served in the old South Vietnam orworked in Treasury or the World Bank Thebookrsquos orientation is sympathetic to the perspec-tive of the conservative Heritage FoundationThe analysis is broadly fair but often relies heavi-ly on secondary sources inducing a lag in analy-sis The book is commendable in pointing outareas such as sluggish legal development inwhich Vietnam has changed slowly (Party andlocal officials have great influence on courts andlaw enforcement rendering the legal systemweak) Yet as the explosive growth of privatefirms shows there are imperfect substitutes forlaw that work up to a point Incorporating thisreality would not have negated their criticismbut would have given it nuance and more speci-ficity This point is important because the firstand several other chapters are written prescrip-tively outlining needed steps including represen-tative democracy as a precondition for sustainedgrowth Such political conclusions would have tobe drawn more carefully to be persuasive even ifthey were correct

The general prescriptions made are sensiblemdashlower corruption improve laws and the legal sys-tem make logical changes to tax spending andfinancial policies etc If the donor communitysometimes strains to be cheerful the Alpertbook does not It is written by smart and skepti-cal ldquoold handsrdquo who are not swept up by eupho-ria over some high growth rates Their views arewell considered but seem to be coming frompeople who are uncertain if Vietnamrsquos success ismore than it should be with so many shortcom-ings The reviewer sometimes has these thoughtshimself



The World Bank volume has over 600 pagesof subtle and in-depth analysis of informationderived from two high-quality living standardssurveys covering about 5000 households Thesixteen chapters include both Vietnamese andforeign authors Most of the latter have workedin Vietnam The first chapter is an overview byPaul Glewwe and the second an essay by DavidDollar on broader themes of growth andpoverty The other chapters cover an array ofimportant questionsmdashwage income householdenterprises agriculture the public safety netethnic minorities and health and educationissues In addition questions of regionalinequality child labor economic mobility andprivate transfers are examined The findingsare not always predictable and are carefullydrawn

The overview besides providing a useful anddetailed summary of the book points out thatwhile inequality within rural or urban areas orregions increased little in the five years coveredby the surveys it jumped sharply between themThis surely implies that migration will increaseas indeed it has (Current census techniquesprobably understate the true level of migration)Since migration is an effective way to reduceinequality and increase opportunity one mighthave hoped for some discussion of trade-offs ofinvesting in currently poor but stagnant (andoften poorly governed) areas versus reducingcongestion in growing urban areas But since themain focus of this book is on self-containedchapters the crosscutting issues will have to waitfor others

An important finding of this book is that pub-lic services matter for health Increasingincome alone has a surprisingly weak impact onmalnutrition or health Even without higherincomes access to health care and clean waterimprove outcomes The book also finds thatgovernment spending on poverty was ineffi-cient Poverty was not well identified nor didsocial programs seem necessarily to benefit thepoor very much Most poverty gains came fromgrowth in agriculture and reductions in controlson agricultural trade though gains in nonfarmjobs are certainly helping There is much morebut overall the book is optimistic that if pro-growthpolicy reforms continue and if public spending isbetter targeted and more efficient further rapidprogress is likely In particular the role of law

reduced corruption and better governance arementioned

Overall these books add to the stock of knowl-edge about Vietnam in both general and particu-lar ways Specialists and students of Vietnam willwant to have access to these books But readerswanting to understand the more recent dynam-ics of that economy will have to augment theirreading

DAVID O DAPICE

Tufts University

The Future of Economic Growth As NewBecomes Old By Robert Boyer TranslationSaint-Gobain Centre for Economic StudiesSeries Cheltenham UK and NorthamptonMass Elgar [2002] 2004 Pp xvii 174$9000 cloth ISBN 1ndash84376ndash606ndashX cloth0ndash84376ndash607ndash8 pbk JEL 2004ndash1113Has the ldquonew economyrdquo ever existed And if

it did what did it stand for How important isthe cluster of ldquoinformation and communicationtechnologiesrdquo (ICT) in shaping the contempo-rary patterns of growth Do the economic bene-fits of ICTs necessarily come in an iron packagetogether with labor market deregulation finan-cial wilderness a shrinking importance of thestate in economic affairs etc all the way throughthe list of the laissez-faire recipe Are thereother viable models around Are we sure thatthe laissez-faire one is the best

These are some of the ambitious questions thatthis short but very dense book addresses And itdoes so by taking the reader through a ldquokaleido-scopicrdquo ride (as the author promises from thestart) which joins the discussion of macroeco-nomic patterns together with an assessment ofthe features of observed technological trajecto-ries the analysis of the institutions underlying thedistinction growth profiles of various countriesand a discussion of business models and manage-ment practices

The ride is largely worthwhile even if at timesbumpy or corner-cutting

I will not try to summarize the whole thread ofthe argument but rather flag some of the majorpoints argued in this work

A theme running through the book is that theldquoNew Economyrdquo with all its whistles-and-bells(the end of the business cycle we are all share-holders ICTs are transforming our all lives andso on) has mainly been an ideological bubble The

Book Reviews 847


book convincingly argues it highlighting bothcontinuities and breaks of the ldquocrazy 90rsquosrdquo vis-agrave-visthe postndashWorld War II growth regime showing atthe same time the inbuilt fragilities of thedotcom bonanza before the burst of the actualfinancial bubble

Rather a more serious and challenging issueregards the ability of ICTs to fuel a new phase ofeconomic growth In brief the answer is ldquoit mayberdquo but this requires at the same time a fewcomplementary institutional conditions techno-logical innovations are not enough Indeed insti-tutional complementarities are a majorinterpretative theme running throughout thebook It is a theme at the center of ldquoRegulationPerspectiverdquomdashwhose main French contributorsinclude M Aglietta R Boyer himself B CoriatJ Mistral and P Petitmdashwith a good deal of over-lapping with comparative institutionalist analysessuch as those by Masahito Aoki and with theldquovariety of capitalismrdquo literature (cf the work ofR Dore R Hall D Soskice W Streeck amongothers) In a rough synthesis the basic idea isthat specific regimes of growth live on quite spe-cific consistency conditions between eg theprocesses of knowledge accumulation the incen-tive agents force the forms of corporate gover-nance and the mechanisms of marketinteraction In this respect a tricky questionBoyer addresses is whether the US model is theonly viable one His answer is forcefully negativeThere is at least another onemdashcall it theldquoScandinavian modelrdquomdashwhich appears to be ableto generate and make fruitful use of ICTs withina much more egalitarian social fabric (Boyermentions also circumstantial evidence about athird ldquocatching-up modelrdquo historically displayedby Ireland and possibly Portugal but I am muchless convinced by that)

Another reason the book is interesting is that ittries to weave together the macroeconomic andtechnological stories with micro business dynam-ics Again contrary to much of the conventionalwisdom there does not appear to be any ldquoone bestwayrdquo to organize and manage the ICT era Rathermicro success appears to be influenced also by theinstitutional context in which firms operate

The work is thought provoking in its analyticalpart and is also stimulating in its normative-polit-ical end which advocates an institutional archi-tecture wherein growth in a knowledge-basedeconomy could be driven by collective services

such as health and educationInevitably such a width of topics is bound to

leave the expert reader frustrated on the details(this in my case applies in primis with regard tothe finer accounts of the drivers of innovationand of the properties of different organizationalforms) But it addresses core interpretative ques-tions on the present and the future of coevolu-tion between ICT technologies and forms ofsocioeconomic governance You do not need toagree on all the answers In any case you areconfronted with a challenging interpretation ofthe contemporary political economy

GIOVANNI DOSI

SantrsquoAnna School of Advanced Studies Italy

Science and Innovation Rethinking theRationales for Funding and GovernanceEdited by Aldo Geuna Ammon J Salter andW Edward Steinmueller New Horizons inthe Economics of Innovation CheltenhamUK and Northampton Mass Elgar distrib-uted by American International DistributionCorporation Williston Vt 2003 Pp xxii413 $12000 ISBN 1ndash84376ndash109ndash2

JEL 2003ndash1575This edited volume brings together an interna-

tional set of the best scholars working in the areaof science and technology policy The editorsargue that a new and more contextual flexibleand nuanced approach to government fundingand the assessment of its impacts is needed asthe prevailing model of innovation has evolved toa networked or distributed model of knowledgeproduction Scholars accept that the linear modelof innovation and the old social contract aredeadmdashthe agenda is what comes next

The first part ldquoThe Evolving Research PolicyEnvironmentrdquo contains three chapters plusintegrative commentary Ron Martin sets thestage by considering the historical evolution ofthe role of science specifically the universityThis chapter provides historical context by con-sidering various versions of the social contractof science and the changes that have created anew yet to be named social contract for the pro-duction of knowledge Michel Callon considersa future crisis in the governance of science bymaking a distinction between researchers withfull citizenship and researchers in the wildmdashthose outside the formal scientific systemUsing a series of provocative examples he



argues that researchers with full citizenship actnot only to deny the scientific validity of theresearcher in the wild but also to deny them avoice in scientific debates Patrick Llerena andFreider Meyer-Krahmer provide a case study of University Louis Pasteur in Strasbourg tosuggest needed changes in the traditionalorganization of research and the promotion ofuniversityndashindustry relationships

The second part ldquoNew Actor Relationshipsrdquoprovides empirical evidence Wes CohenRichard Nelson and John Walsh provide evi-dence of the importance of public research toindustrial firms in the United States and presentthe key channels of exchanges between industryand academic research A complementary chap-ter by Patrick Llerena Mireille Matt andVeronique Schaeffer analyzes the evolution ofFrench research system to encourage new indus-trial activities The authors point out that the lackof university autonomy managing personnel realestate and finance and the myth of an entrepre-neurial researcher able to derive substantialresources from commercialization activitiesinhibit realizing policy goals Massimo RiccaboniWoody Powell Fabio Pammolli and JasonOwen-Smith present a comparative study oninnovation system in the life sciences betweenthe United States and Europe in particular thelinkages between research universities publicresearch institutes and the private sector Theyconclude that the sets of network relations in theUnited States are concentrated in regional clus-ters with considerable interactions across organi-zations and disciplines whereas the Europeannetworks are less dense with smaller numbers ofactors in highly specialized communities Theysuggest that European policy should not attemptto copy American policy but rather be focused ondeveloping a new set of network interactionsbetween basic research and development andamong small firms and universities withinEurope Fabrizio Cesaroni and AlfonsoGambardella consider factors that influenceresearch team performance In particular theyfind the PIrsquos past publications and the numbers ofcollaborations with foreign research institutionsplay a critical role in determining research productivity

The third section ldquoModels of ResearchFundingrdquo provides conceptual frameworks PaulDavid and Louise Keely examine the science-

funding environment that involves multiplesources They argue that the evaluation of policyaction should be framed in a context of interde-pendence of multiple funding strategies and out-comes regardless of the supranational agencyrsquosunderlying objective Robin Cowan and NicolasJonard develop a model of knowledge creationand diffusion in networks to understanding howknowledge levels interagent and intergroup vari-ance and agent and group specialization respondto changes in various parameters Based on theresults from numerical experiments of the pro-posed network model Cowan and Jonard findthat average knowledge level in the economyincreases with labor mobility Peter Swann urgescaution in the application of club goods solutionto funding basic research He concludes that ina complex economy with substantial intersection-al sciencendashtechnology relationships and a com-munity with diverse innovators public finance isstill preferable to any attainable club goods solu-tion Dominique Foray considers the problemsof creating a knowledge infrastructure Based onthe assumption that public good is industry-spe-cific and therefore it is possible to internalize theexternalities to the club participants Forayreviews empirical and historical evidence on thefeasibility advantages and shortcomings of clubgoods approach to the support of industry-specific good

In sum this is an interesting and useful collec-tion Each section concludes with an integrativeand insightful commentary which ties the sec-tions together and offers useful perspectivesThese commentaries should be useful reading fora doctoral student looking for a dissertation topicThe editors have done a useful job of solving theproblem that plagues many edited volumesmdashintroductory sections create a narrative and thesections and chapters are well integrated

MARYANN P FELDMAN

University of Toronto

The Future of Domestic Capital Markets inDeveloping Countries Edited by Robert ELitan Michael Pomerleano and VasudevanSundararajan World BankIMFBrookingsEmerging Markets Series Washington DCBrookings Institution 2003 Pp x 532$3995 paper ISBN 0ndash8157ndash5299ndash7

JEL 2004ndash0286

Book Reviews 849


This book is a collection of fifteen chapters pre-sented by academic scholars policymakers andpractitioners at a conference organized by theWorld Bank IMF and the Brookings Institutionon April 14ndash16 2003 Together with a summaryoverview and the essence of five panel discus-sions this makes for an impressive collection ofthinking on the future of domestic capital mar-kets in developing countries The papers covermore than capital markets however Somepapers analyze aspects of banking systems othersdiscuss the appropriate sequence of financial lib-eralization while others analyze the future ofsupervision There are actually four parts to thebook capital markets development around theworld integrated supervision securities tradingand private equity each followed by a panel dis-cussion And it concludes with a looking forwardsection also with a panel

Altogether it is a formidable effort more than500 pages There is consequently something herefor everybody While the style is not that of anacademic journal some of the papers will appealto academics as they present some new (empiri-cal) results say on the capital structure financ-ing and performance of firms around the world(Jack Glen and Ajit Singh and Dilip Ratha PhilipSuttle and Sanket Mohapatra) the lessons ofcapital markets liberalization (Peter Blair Henryand Peter Lombard Lorentzen) the ability of themarket to discipline banks (Glenn HoggarthPatricia Jackson and Erlend Nier) and the linksbetween institutional savings and financial mar-kets (Alberto R Musalem and Thierry Tressel)Some papers also do an excellent job of describ-ing the literature in their respective fields Thepractitioners will surely be rewarded as many ofthe authors and panel discussants have been atthe forefront of capital markets development indeveloping countries and share their insightsgenerously

It is obviously hard for somebody currentlyworking in the financial sector at the World Bankone of the sponsors of the event to be complete-ly objective about this book Furthermore onearticle (Lee on the future of securities trading)draws on some joint work Furthermore while Idid not attend the conference I had seen some ofthe papers before Still I found a very worthwhileread as the topic of capital markets in developingcountries (and developed countries) remains avery dynamic one And the book has been a good

read for some time as it already came out late2003 within eight months after the conference arecord time It is also reasonably priced $3995a further big plus for a policy-oriented publica-tion Furthermore as already noted one getsmuch more than just wise thoughts on capitalmarkets development

The mix of authors and the speed has come ata price though I missed sometimes the rigor thatone would expect in a more academic bookReferences to data or facts are sometimes miss-ing or unclear Some papers did not refer to anyworks and seem to be authorsrsquo collected wisdomson the topics And the analyses by being split invarious subtopics remain sometimes partial onthe topic of capital markets In the end policy-makers and others presumably want the overviewhow the various elements now discussed sepa-rately come together Is liberalization of capitalmarkets without proper corporate governance orappropriate trading systems beneficial Howdoes the role of integrated supervision phase bestwith the presence of universal banking Andinevitably in a dynamic field the academic litera-ture has moved on The work by Rafael La PortaFlorencio Lopez-de-Silanes and Andrei Shleifer(2005) for example has already given us muchnew insight on what detailed forms of regulationand supervision best help foster capital marketsdevelopment And Joshua Lerner and AntoinetteSchoar (2005) has given us valuable lessons onwhat works in terms of private equity and venturecapital contracts around the world

The biggest values of the book are the paneldiscussions these are well transcribed and we getthe sense of being there as we can read the backand forth among panelists and with the audiencein the form of questions The highlight in thisrespect is the last panel where Antoine vanAgtmaelmdashthe person who among others (mayhave) coined the term ldquoemerging marketsrdquomdashandFrank Venerosomdashthe person who among otherspredicted the developing countries debt crisis inthe mid-1970smdashdebate each other They spare offas an optimist and a somewhat more pessimistand provide much food for thought

I particularly think the view of van Agtmaelthat every country that has a central bank needsto have a capital market provides in a nice way asummary perspective Does this mean one capi-tal market for Euroland Given trends in terms ofconsolidation of stock exchanges and trading sys-



tems in Europe both in equity markets and bondmarkets this seems right But what about LatinAmerica where there has been difficulty develop-ing viable capital markets Is it the history of lim-ited trust in onersquos own currency that preventscapital markets from taking off in this part of theworld And how about Africa where there aremany central banks but where most financial sys-tems are smaller than a few billion dollars Herehaving a currency alone is clearly not a sufficientcriteria since there are few viable capital marketsat least to date In any case it shows that morethinking is still needed and we all eagerly awaitthe results

In summary it is a buy Read it but be a smartreader and skim through some material and pickout the gems Then go on and be much betterequipped with the right questions to considerwhen reading the latest (academic) papers on thistopic where you may find some new insights andperhaps even some ldquoanswersrdquo

REFERENCES

La Porta Rafael Florencio Lopez-de-Silanes andAndrei Shleifer Forthcoming ldquoWhat Works inSecurities Lawsrdquo Journal of Finance

Lerner Joshua and Antoinette Schoar 2005 ldquoDoesLegal Enforcement Affect Financial TransactionsThe Contractual Channel in Private EquityrdquoQuarterly Journal of Economics 120(1) 223ndash46

STIJN CLAESSENS

World Bank and University of Amsterdam

Japanrsquos Economic Recovery Commercial PolicyMonetary Policy and Corporate GovernanceEdited by Robert M Stern Cheltenham UKand Northampton Mass Elgar distributed by American International DistributionCorporation Williston Vt 2003 Pp xix 456$11000 ISBN 1ndash84376ndash120ndash3

JEL 2003ndash1599The ldquolost decaderdquo for Japan is the period of

the 1990s during which it migrated from the cat-egory of economic wonder to economic stagna-tion For those who knew the Japan of the1980s the talk of financial institutions giddywith ever-rising prices had come to dominatethe stellar performance of Japanese manufactur-ers It has been the fall of the financial housesthat has been the primary object of the Japanesepolicy discussions The manufacturing sector

has had its setbacks but no where to the devas-tation that has struck the Japanese bankingindustry

It would be to the financial sector then that onewould turn first for the start of an explanation ofthe crisis and prospects of a turnaround Yet thisbook edited by Robert Stern begins somewhatawkwardly with an excellent analysis of NAFTAand trade diversion then followed by ten chap-ters two of which address again trade three ondirect investment and trade two directly on thefinancial sector one historical chapter on pricestability in Sweden and a final chapter ondemography and savings Perhaps there is acounterintuitive theory to this organization thatconsiders trade shocks or long-term seculartrends in trade to be the cause of the crisis If thisbe the implicit theory the trade chapters do notspeak directly to this thesis despite their obviousmerits and quality

Rather the trade and direct investment chap-ters are largely oriented toward answering theperennial question of whether there is too littleimports or investment in Japan These chapterscollectively suggest that Japan did change duringthe 1990s Alan Deardorff offers the speculativethesis that the Japanese trade advantage of short-ening ldquotime to marketrdquo had evaporated throughdiffusion Theresa Greaney notes that Asian out-sourcing by Japanese firms lead to import levelsrelatively similar to those in the American econo-my In addition the chapter by Keith Head andJohn Ries on productivity finds that growth ofoff-shore manufacturing appeared to boostertotal factor productivity of Japanese firms Unlikethe findings regarding Singapore and HongKong Japanrsquos productivity growth is sustainedand not explained entirely by measurables ielabor or capital Thus in the 1990s Japanesefirms became multinational corporations pro-ducing and selling in many countries and ship-ping products between them including theirhome country Japan

The claim of low level of foreign direct invest-ment in Japan is challenged by Keiko Ito andKyoji Fukao Using a new set they find that theMITI estimates are too low by a factor of 5 AsFukunari Kimura notes in his comment thisdiscrepancy might be due to the very low owner-ship requirement (10 percent) to be defined as aforeign affiliate Using this definition we can eas-ily speculate that Renaultrsquos large equity stake in

Book Reviews 851


Nissan alone would explain a substantial portionof the increase

Kimura and Kozo Kiyota analyze an interestingquestion did exports and foreign direct invest-ment accelerate corporate reforms Through animpressive assembly of data and analysis theyfind an association between restructuring andexposure to foreign markets They concede thatthey donrsquot have observations on the mechanisms(or instruments) that might rule out the spuriouscausalitymdashgood firms export and restructure Inthe absence of instruments the heretical innova-tion of relying on case evidence (that is dis-cussing a few firms or industries) could haveprovided some helpful foliage

The central chapter of the book is MitsuhiroFukaorsquos study of the financial sector and corpo-rate governance Fukao provides a crisp history toaccompany his statistical analysis that shows howdeflation and negative interest rates created afinancial crisis in which asset-poor banks couldnevertheless survive He argues that the poorperformance is the outcome of poor corporategovernance

The remaining chapters of the book presentequally balanced analyses Gary Saxenhousecharacteristically contributes an insightful com-parison of Japanrsquos price stability efforts to those ofSweden (or more appropriately the UnitedKingdom) in the 1930s A companion chapter byHiroshi Fujiki and Shigenori Shiratsuka analyzethrough a series of well-executed charts theeffects of the 1999 zero-interest rate policy onforward markets They conclude that despite theeffect of these policies on flattening the yieldcurve at a lower levelmdashand hence offering anincentive to long-term investments there was lit-tle transmission to the nonfinancial sectors Thefinal chapters present an analysis of demographiceffects (written by Naohiro Yashiro) and employ-ment policy (by Takashi Omori) A high point ofthese two chapters is Yashirorsquos attempts to figureout whether Japanese children never leave homeor Japanese parents never let them go

Much of the interest of the book lies in theexcellent comments on the chapters For exam-ple in reference to the Head and Riesrsquos chapteron productivity Keiichiro Kobayashi shows howtheir firm level analysis can generate high totalfactor productivity estimates where the conven-tional industry level estimates would lead to lowestimates This is a very important observation

that is worthy of more study It applies equally tothe Kimura and Kiyota chapter that analyzed firmdata regarding exposure to foreign markets Tothe contrary a historical handicap to Japan hasbeen its low exposure to competition by foreignmultinationals and imports in the home marketIt would be interesting to compare the firmeffects of foreign market exposure to the industryeffects of foreign competition in Japan

Hugh Patrickrsquos comments and those of YoshiroMiwa and J Mark Ramseyer enrich the techni-cally sound chapter of Mitsuhiro Fukao on thefinancial sector and corporate governancePatrick makes one of the few clear policy propos-als in endorsing a government initiative to createa corporation to buy bad debt financed by guar-anteed bonds He also emphasizes the difficultyof acquisitions in Japan and hence the obstaclesto restructuring Miwa and Ramseyer offer a col-orful refutation of Fukaorsquos thesis on bad gover-nance pointing their finger instead at badgovernment regulation

The chapters in this book are of high quality andthey deserve individually to be read by specialistsBut just as logs are not the same thing as a cabinthe book will disappoint those in search of a syn-thetic treatment of what went so wrong in Japanand what are its prospects The title is a mis-nomer as Japan has yet to enter into a sustainedrecovery There is little evidence given in thisbook when this recovery might occur and whatpolicies would help it along Given the duration ofthe crisis and the many remedies offered andtried sometimes silence is appropriate modesty

BRUCE KOGUT

INSEAD

Indonesian Living Standards Before and Afterthe Financial Crisis By John Strauss et alRAND Corporation Monograph Series SantaMonica Calif RAND Corporation SingaporeInstitute of Southeast Asian Studies 2004 Ppxxi 402 $2590 paper ISBN 0ndash8330ndash3558ndash4

JEL 2005ndash0347The Indonesian Family Life Survey (IFLS) is

one of the great accomplishments in multitopicdata collection undertaken by economists anddemographers An initial survey (IFLS1) wasfielded to over 30000 individuals in more than7000 Indonesian households in 1993 A secondround of the survey (IFLS2) took place in 1997just months before the major impact of the



Asian financial crisis hit Indonesia A follow-upsurvey (IFLS2+) was given to a 25 percent sub-sample of households in the second half of 1998in order to gauge the short-term impact of thecrisis The third full round of the survey(IFLS3) in 2000 then resurveyed the full set ofhouseholds Careful attention was given totracking households who moved location andindividuals who split-off from their originalhouseholds allowing an astounding 95 percentof the initial sample to be surveyed seven yearslater In addition to the individual data facilitysurveys were conducted of health and schoolingfacilities that serve households in the sampledcommunities The data from all rounds of theIFLS are publicly available and have spurned alarge number of journal articles workingpapers and theses (The data are available athttpwwwrandorglaborFLSIFLS The web-site also lists an additional wave of the surveyplanned for 2005) Moreover the success in fol-lowing a large number of individuals over timehas helped dispel notions that collection of large-scale panel data is not possible in developingcountries

John Strauss and his coauthors use the 1997and 2000 rounds of the survey to provide a verydetailed description of changes in a wide array ofliving standards measures between 1997 and2000 The first chapter provides a brief timelineof the spread of the financial crisis and its effecton the exchange rate and food prices The sam-pling methodology for the IFLS surveys is sum-marized in the second chapter Each of theremaining chapters of the book then separatelycovers one aspect or measure of living standardsTopics include poverty and expenditure subjec-tive standards of living employment and wageseducation health outcomes health inputs healthservice delivery family planning family planningservices and social safety net programs For eachtopic the authors typically summarize means ofthe different indicators in 1997 and 2000 for var-ious groups of interest and then pool the twoyears to run a regression or linear probabilitymodel in which the indicator of interest isregressed on a set of covariates which are allinteracted with a year 2000 dummy variable Theresulting tables provide a detailed description ofhow both the level and change in the indicator isassociated with age gender education and geo-graphic location Another nice approach used to

describe changes in the data is the use of sto-chastic dominance tests to determine whetherthe distribution of measures such as poverty andchild weight-for-height vary significantly acrossthe two years The main finding is that almostthree years after the Asian crisis hit Indonesiaindividuals appear to have recovered to precrisislevels or higher in most measures of well-being

I see three main groups of readers for thisbook The IFLS panel data are unique in theircombination of breadth of indicators and samplesize The data should therefore be of interest notonly to development economists but to econo-mists in general looking for panel data whichallows for testing a wider range of theories thanoffered by the PSID The book provides a ratherexhaustive description of the IFLS data and of allthe various types of variables collected and soshould serve the casual reader who wants a self-contained publication with which to get a betterfeel for the contents of the IFLS data The sec-ond group who will also be well-served by thisbook consists of policymakers and Indonesia spe-cialists who want a comprehensive overview ofchanges in living conditions among Indonesianhouseholds following the crisis

I count myself as a member of a third group ofreaders whose greatest interest in this book is inits potential to help us understand how house-holds adjusted to the large economic shockbrought about by the financial crisis A large lit-erature has addressed the ability of householdsto smooth idiosyncratic shocks but relatively lessis known about the mechanisms households useto cope with large aggregate shocks The bookonly half-delivers in this regard Although thedata seem to suggest that individuals recoveredto their precrisis levels interpretation of theresults is hampered by the use of only beforeand after comparisons For exampleFrankenberg Thomas and Beegle (1999)looked at the short-term impact of the crisis bycomparing the IFLS2+ data collected in 1998with the 1997 survey and found evidence thateducation and child preventative health caredeclined during the initial stages of the crisisparticularly among the poor This raised the fearthat the adjustment strategies used by house-holds might have long-term negative effects Incontrast this book finds school enrolment ratesin 2000 were actually higher than in 1997 but bynot using the 1998 data is unable to address

Book Reviews 853


directly the fundamental question of whether theparticular children withdrawn from school duringthe crisis later returned

The use of beforendashafter comparisons based ononly two surveys makes it impossible to distinguishthe extent which the changes observed are due tothe crisis and subsequent recovery and how muchare due to preexisting trends and standard labormarket flux For example the authors examinetransitions in and out of poverty between 1997 and2000 Some of these transitions will be due tomeasurement error some due to standard transito-ry movements in and out of poverty some due to apreexisting trend which had been lowering pover-ty rates considerably over the preceding thirtyyears and some due to households whom the cri-sis pushed into poverty Analysis based on only twoperiods of data can not separate these different fac-tors to allow one to determine the extent to whichthe crisis pushed particular types of householdsinto poverty The authors are certainly aware of thelimitations of what can be concluded and acknowl-edge that a better measure of the medium-termimpact of the crisis could be to compare the 2000results with what one would have expected in theabsence of the crisis While such counterfactual

comparisons require additional assumptions useof the data in the IFLS and other Indonesiansurveys would allow for such an approach

Notwithstanding these concerns the bookoffers a rich base for future research to build onThe multifaceted nature of the IFLS data sug-gests scope for more research on the interrela-tionships among health labor marketseducation and household welfare The penulti-mate chapter also provides a baseline againstwhich to compare the radical decentralization ofgovernment services which began at the start of2001 in Indonesia The IFLS should thereforecontinue to fuel research for many years to comeand the authors should be congratulated for theirrole in the provision of this public good

REFERENCES

Frankenberg Elizabeth Duncan Thomas andKathleen Beegle 1999 ldquoThe Real Costs ofIndonesiarsquos Economic Crisis Preliminary Findingsfrom the Indonesian Family Life Surveysrdquo RANDLabor and Population Working Paper 99ndash04

DAVID J MCKENZIE

Stanford University



book Michael Watts extends that notion to thereading of literature There are so many cleverexamples that picking out just a few is fairly arbi-trary and doesnrsquot really do justice to the 300-pluspages of selected literature But Irsquoll try anyway

There are examples from the 1800s that ringtrue today An excerpt from Hard Times byDickens (1854) gives a wonderful example of thenegative externalities associated with pollutionDescribing Coketown he wrote ldquoIt was a town ofmachinery and tall chimneys out of which inter-minable serpents of smoke trailed themselves forever and ever and never got uncoiled It had ablack canal in it and a river that ran purple withill-smelling dye rdquo Dickens goes on to relatethese outcomes to the presence of equally well-described factories Bastiatrsquos Petition of theManufacturers of Candles (1845) simply nails theconcept of the gains from trade and (no offenseto Dixit and Norman) is really fun to read VictorHugo weighs in on principle agent problems in awell-chosen excerpt from Les Miserables (1862)On the other side of the Atlantic Mark Twainrsquoscomparison of real versus nominal wages in AConnecticut Yankee in King Arthurrsquos Court isanother classic

The book draws from twentieth century clas-sics too John Steinbeck makes multiple appear-ances Many of us learned that Steinbeck was aremarkable writer focusing on the injustices ofeveryday life Wrong He was a really good eco-nomics writer He illustrated the idea of publicgoods in his description of the national parks inTravels with Charley In Search of America themorality of making a killing in the futures marketin East of Eden and the concept of collusion inThe Pearl

Professor Watts does not only select examplesfrom the classics He has some wonderful exam-ples from books that you might have read on thebeach instead of in a classroom The tragedy ofthe commons is illustrated by Sebastian Jungerrsquosdescription of modern day commercial fishing inThe Perfect Storm In another excerpt from thatbook Junger gives a vivid description of the wagestructure on a fishing boat and how it varies withage and experience Itrsquos more fun than a Mincerregression anyday

John Krakauerrsquos Into Thin Air illustrates a fair-ly libertarian view of the role of culture in labormarkets when describing the impact of Everestexpeditions on the market for Sherpas and the

resulting changes in living standards for theSherpa communities While I find real value toreading what folks like Katz Krueger DiNardoand Card have to say about the structure ofwages and returns to education and computersand the like David Sedaris is a hell of a lot morefun The excerpts from Sedaris are hilarious andright on target

Throughout the book each passage is accom-panied by a short and to-the-point description ofwhy that particular passage is economicallyinformative It is a testament to the wisdom of hisselections that these descriptions are often only afew lines No trained economist has to search toohard to find the pearls of economic insight in theselections

This is a fun book If you read a lot yoursquoll enjoyrereading old friends in a new (economicallyinsightful) light If you donrsquot read much you canrandomly spout a few of the examples from thisbook and people will think that you are prettydarn well-read (Think of all the time yoursquoll save)

JIM LEVINSOHN

University of Michigan

B Schools of Economic Thoughtand Methodology

Wassily Leontief and InputndashOutput EconomicsEdited by Erik Dietzenbacher and Michael LLahr Cambridge New York and MelbourneCambridge University Press 2004 Pp xxi 396$8000 ISBN 0ndash521ndash83238ndash1

JEL 2004ndash1213Wassily Leontief passed away on February 5

1999 At the next meeting of the InternationalConference on InputndashOutput Techniques(Macerata Italy August 2000) a series of plenarysessions was held to honor his memory and hiswork organized by Anne Carter and the editorsThe nineteen papers in this book are primarilyfrom those sessions

The contributions to the volume are organizedinto two main parts ldquoReflections onInputndashOutput Economicsrdquo and ldquoPerspectives ofInputndashOutput Economicsrdquo The first part aims atgaining a deeper understanding of Leontiefrsquos lifeand work The second part is a collection ofresearch papers that cover a broad spectrum oftopics that have grown out of Leontiefrsquos originalresearch










Book Reviews 825



DOUGLAS S MEADE






















VICTOR ZARNOWITZ


D Microeconomics



Book Reviews 827







WILLIAM P ROGERSON

















Book Reviews 829
















ELLEN E MEADE

American University











Book Reviews 831






LANT PRITCHETT

World Bank

















Book Reviews 833



MIRA WILKINS


















SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University










Book Reviews 825



DOUGLAS S MEADE






















VICTOR ZARNOWITZ


D Microeconomics



Book Reviews 827







WILLIAM P ROGERSON

















Book Reviews 829
















ELLEN E MEADE

American University











Book Reviews 831






LANT PRITCHETT

World Bank

















Book Reviews 833



MIRA WILKINS


















SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University




DOUGLAS S MEADE






















VICTOR ZARNOWITZ


D Microeconomics



Book Reviews 827







WILLIAM P ROGERSON

















Book Reviews 829
















ELLEN E MEADE

American University











Book Reviews 831






LANT PRITCHETT

World Bank

















Book Reviews 833



MIRA WILKINS


















SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University











VICTOR ZARNOWITZ


D Microeconomics



Book Reviews 827







WILLIAM P ROGERSON

















Book Reviews 829
















ELLEN E MEADE

American University











Book Reviews 831






LANT PRITCHETT

World Bank

















Book Reviews 833



MIRA WILKINS


















SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University








WILLIAM P ROGERSON

















Book Reviews 829
















ELLEN E MEADE

American University











Book Reviews 831






LANT PRITCHETT

World Bank

















Book Reviews 833



MIRA WILKINS


















SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University












Book Reviews 829
















ELLEN E MEADE

American University











Book Reviews 831






LANT PRITCHETT

World Bank

















Book Reviews 833



MIRA WILKINS


















SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University














sp05_BookReview 82305 1203 PM 30



ELLEN E MEADE

American University











Book Reviews 831






LANT PRITCHETT

World Bank

















Book Reviews 833



MIRA WILKINS


















SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University





ELLEN E MEADE

American University











Book Reviews 831






LANT PRITCHETT

World Bank

















Book Reviews 833



MIRA WILKINS


















SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University







LANT PRITCHETT

World Bank

















Book Reviews 833



MIRA WILKINS


















SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University











Book Reviews 833



MIRA WILKINS


















SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University




MIRA WILKINS


















SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University







SUSAN E WOODWARD






Book Reviews 835












DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University













DEBRA A BARBEZAT

Colby College







Book Reviews 837









MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University










MORTON O SCHAPIRO

Williams College











BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University








BRIAN JACOB





Book Reviews 839
















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University

















LUCIE SCHMIDT

Williams College








Book Reviews 841








REFERENCES














PETER DAVIS











Book Reviews 843








JOHN J SIEGFRIED


N Economic History














LEONARD A CARLSON

Emory University



JEL 2005ndash0377


Book Reviews 845















DAVID O DAPICE

Tufts University







Book Reviews 847








GIOVANNI DOSI













MARYANN P FELDMAN



JEL 2004ndash0286

Book Reviews 849













REFERENCES



STIJN CLAESSENS









Book Reviews 851










BRUCE KOGUT

INSEAD











Book Reviews 853






REFERENCES


DAVID J MCKENZIE

Stanford University



Book Reviews - Universidad de Salamanca | Universidad de Salamanca

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Transcript of Book Reviews - Universidad de Salamanca | Universidad de Salamanca