Economics Books

Book SynopsisRedefines America's perception of itself. This book shows that the United States is no longer a free-enterprise society, but a structured state controlled by the largest companies. It presents the goal of these companies as immortality through an uninterrupted stream of earnings.Trade ReviewPraise for the original edition: "The New Industrial State deserves the widest possible attention and discussion."--Raymond J. Saulnier, New York Times Praise for the original edition: "[The New Industrial State] is a dazzling work, full of brilliant epigrams, intriguing aphorisms and sardonic humor."--Harvey H. Segal, Washington Post Praise for the original edition: "[W]ithout a doubt one of the most provocative offerings of our time in the realm of economics."--John McCutcheon, Chicago TribuneTable of ContentsGeneral Editor's Introduction ix Foreword by James K. Galbraith xi Acknowledgments xxv Introduction to the Fourth Edition xxvii Chapter 1: Change and the Planning System 1 Chapter 2: The Imperatives of Technology 13 Chapter 3: The Nature of Industrial Planning 25 Chapter 4: Planning and the Supply of Capital 42 Chapter 5: Capital and Power 56 Chapter 6: The Technostructure 73 Chapter 7: The Corporation 89 Chapter 8: The Entrepreneur and the Technostructure 108 Chapter 9: A Digression on the Firm under Socialism 123 Chapter 10: The Approved Contradiction 138 Chapter 11: The General Theory of Motivation 162 Chapter 12: Motivation in Perspective 176 Chapter 13: Motivation and the Technostructure 186 Chapter 14: The Principle of Consistency 199 Chapter 15: The Goals of the Planning System 207 Chapter 16: Prices in the Planning System 223 Chapter 17: Prices in the Planning System (Continued) 235 Chapter 18: The Management of Specific Demand 245 Chapter 19: The Revised Sequence 263 Chapter 20: The Regulation of Aggregate Demand 273 Chapter 21: The Nature of Employment and Unemployment 289 Chapter 22: The Control of the Wage-Price Spiral 305 Chapter 23: The Planning System and the Union I 322 Chapter 24: The Planning System and the Union II 337 Chapter 25: The Educational and Scientific Estate 347 Chapter 26: The Planning System and the State I 365 Chapter 27: The Planning System and the State II 377 Chapter 28: A Further Summary 390 Chapter 29: The Planning System and the Arms Race 398 Chapter 30: The Further Dimensions 419 Chapter 31: The Planning Lacunae 432 Chapter 32: Of Toil 443 Chapter 33: Education and Emancipation 452 Chapter 34: The Political Lead 462 Chapter 35: The Future of the Planning System 473 An Addendum on Economic Method and the Nature of Social Argument 489 Index 503

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Book SynopsisSuitable for researchers and students looking to understand this emerging field in economics, this title surveys the major theories, evidence, and methods used in the field. It displays the topics in organizational economics, including the roles of individuals and groups in organizations, organizational structures and processes, and more.Trade Review"The defining book on the subject, The Handbook of Organizational Economics is essential reading for researchers and students looking to understand this emerging field in economics."--World Book IndustryTable of ContentsContributors ix Introduction 1 Robert Gibbons and John Roberts PART I FOUNDATIONS *1 Complementarity in Organizations 11 * Erik Brynjolfsson and Paul Milgrom *2 Economic Theories of Incentives in Organizations 56 * Robert Gibbons and John Roberts *3 Property Rights 100 * Ilya Segal and Michael D.Whinston *4 Transaction Cost Economics 159 * Steven Tadelis and Oliver E.Williamson PART II METHODS *5 Clinical Papers in Organizational Economics 193 * George P. Baker and Ricard Gil *6 Experimental Organizational Economics 213 * Colin F. Camerer and Roberto A.Weber *7 Insider Econometrics 263 * Casey Ichniowski and Kathryn Shaw PART III WITHIN FIRMS: INDIVIDUALS AND GROUPS *8 Employment as an Economic and a Social Relationship 315 * James N. Baron and David M. Kreps *9 Authority in Organizations 342 * Patrick Bolton and Mathias Dewatripont *10 Decisions in Organizations 373 * Robert Gibbons, Niko Matouschek, and John Roberts *11 Leadership and Corporate Culture 432 * Benjamin E. Hermalin *12 Personnel Economics 479 * Edward P. Lazear and Paul Oyer *13 Theory and Evidence in Internal LaborMarkets 520 * Michael Waldman PART IV WITHIN FIRMS: STRUCTURES AND PROCESSES *14 Technological Innovation and Organizations 575 * Pierre Azoulay and Josh Lerner *15 Hierarchies and the Division of Labor 604 * Luis Garicano and Timothy Van Zandt *16 Internal Capital Markets 655 * Robert Gertner and David Scharfstein *17 What Do Managers Do? 680 * Robert Gibbons and Rebecca Henderson *18 Corporate Governance 732 * Benjamin E. Hermalin *19 Incentives in Hierarchies 764 * Dilip Mookherjee *20 Strategy and Organization 799 * John Roberts and Garth Saloner PART V BETWEEN FIRMS *21 Vertical Integration and Market Structure 853 * Timothy Bresnahan and Jonathan Levin *22 Ownership and Organizational Form 891 * Henry Hansmann *23 Contracts between Legal Persons 918 * Lewis A. Kornhauser and W. Bentley MacLeod *24 Inter-Firm Contracts 958 * Francine Lafontaine and Margaret E. Slade *25 Relational Incentive Contracts 1014 * James M. Malcomson *26 Hybrid Modes of Organization 1066 * Claude M'enard PART VI BEYOND FIRMS *27 Corruption 1109 * Abhijit Banerjee, Rema Hanna, and Sendhil Mullainathan *28 Delegation, Control, and the Study of Public Bureaucracy 1148 * Terry M. Moe Name Index 1183 Subject Index 1203

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Book SynopsisMen and women became experts at influencing one another to achieve their cooperative ends, but also became trapped in strategies of manipulation and deception in pursuit of sex and partnership. Drawing on biology, sociology, anthropology, and economics, this book shows that conflict between the sexes is, paradoxically, the product of cooperation.Trade ReviewOne of Financial Times (FT.com) Best Economics Books of 2013 "[A] witty, informative and cogent new book."--Jonathan Ree, Guardian "Seabright zooms out and across history in an accessible mix of scholarly prose and chatty anecdote to explain why inequalities and disagreements persist beyond potty-training... Turning to today, Seabright investigates everything from the effects of technology on gender-bias, to the various benefits of tallness, talent, and charm in the workplace."--PublishersWeekly.com "Throughout the book, Seabright is terrific company--entertaining and convincing."--John Whitfield, Nature "Right off the bat, I can say that this book should not be collecting dust on your shelf... [I]s War of the Sexes a challenging and interesting read? Undoubtedly so."--Sander Van Der Linden, LSE Politics and Policy blog "The War of the Sexes is a fascinating read. I love its interdisciplinarity."--Diane Coyle, The Enlightened Economist "Seabright, an economist familiar with evolutionary modelling, synthesises several disciplines in asking what our evolutionary heritage teaches us about men's and women's rights and roles in the modern labour market. Judicious in bringing Darwinism to bear on contemporary mores, he avoids the vulgar reductionism that often plagues this kind of popular science."--Camilla Power, Times Higher Education "Seabright is unusual among economists in being a thoroughgoing Darwinian, and in this fascinating book he takes an evolutionary perspective to explore why there are still inequalities in economic power between men and women."--Jon Wainwright, SkepticTable of ContentsAcknowledgments ix Part One Prehistory Chapter 1: Introduction 3 Chapter 2: Sex and Salesmanship 27 Chapter 3: Seduction and the Emotions 40 Chapter 4: Social Primates 60 Part Two Today Chapter 5: Testing for Talent 93 Chapter 6: What Do Women Want? 111 Chapter 7: Coalitions of the Willing 126 Chapter 8: The Scarcity of Charm 141 Chapter 9: The Tender War 157 Notes 183 References 211 Index 233

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Book SynopsisAnnuities are financial products that guarantee the holder a fixed return so long as the holder remains alive, thereby providing insurance against lifetime uncertainty. This book offers readers a theoretical analysis of the functioning of private annuity markets.Trade Review"Eytan Sheshinski has written the definitive book on the economics of annuities. In light of the demographic transitions in many countries and the changing nature of social insurance, this work will be extremely important in the years ahead."—Jerry R. Green, Harvard University"This book develops the economic theory of private annuity markets and fills an important gap in previous research. Its systematic and insightful analysis provides a foundation on which future students of insurance markets, and policy analysts concerned with these markets, are sure to build."—James Poterba, Massachusetts Institute of Technology"With exceptional clarity, Sheshinski presents the analysis of savings and annuitization, incorporating new results and raising interesting research questions."—Peter Diamond, Massachusetts Institute of Technology"This work is a very complete study of a surprisingly neglected field. The technical and conceptual problems raised by uncertainty as to the individual's lifetime, central to this study, are handled with great skill and is well written."—Kenneth J. Arrow, Nobel Prize-winning economistTable of ContentsPreface xiii Chapter 1: Introduction 1 1.1 Brief Outline of the Book 5 1.2 Short History of Annuity Markets 9 1.3 References to Actuarial Finance 11 Chapter 2: Benchmark Calculations: Savings and Retirement 12 Chapter 3: Survival Functions, Stochastic Dominance, and Changes in Longevity 15 3.1 Survival Functions 15 3.2 Changes in Longevity 18 Chapter 4: Life Cycle Model with Longevity Risk: First Best and Competitive Equilibrium 21 4.1 First Best 21 4.2 Competitive Equilibrium: Full Annuitization 23 4.3 Example: Exponential Survival Function 25 4.4 Equivalence of Short-term, Long-term, and Deferred Annuities 26 Appendix 27 Chapter 5: Comparative Statics, Discounting, Partial Annuitization, and No Annuities 29 5.1 Increase in Wages 29 5.2 Increase in Longevity 30 5.3 Positive Time Preference and Rate of Interest 32 5.4 Partial Annuitization: No Short-term Annuity Market 33 5.5 Partial Annuitization: Low Returns on Annuities 35 5.6 Length of Life and Retirement 35 5.7 Optimum Without Annuities 38 5.8 No Annuities: Risk Pooling by Couples 40 5.9 Welfare Value of an Annuity Market 41 5.10 Example: Exponential Survival Function 42 Appendix 44 Chapter 6: Subjective Beliefs and Survival Probabilities 45 6.1 Deviations of Subjective from Observed Frequencies 45 6.2 Behavioral Effects 45 6.3 Exponential Example 47 6.4 Present and Future Selves 48 Chapter 7: Moral Hazard 51 7.1 Introduction 51 7.2 Comparison of First Best and Competitive Equilibrium 51 7.3 Annuity Prices Depending on Medical Care 54 Appendix 55 Chapter 8: Uncertain Future Survival Functions 56 8.1 First Best 56 8.2 Competitive Separating Equilibrium (Risk-class Pricing) 59 8.3 Equilibrium with Short-term Annuities 60 8.4 The Efficiency of Equilibrium with Long-term Annuities 62 8.5 Example: Exponential Survival Functions 65 Chapter 9: Pooling Equilibrium and Adverse Selection 67 9.1 Introduction 67 9.2 General Model 69 9.3 Example 71 Appendix 75 Chapter 10: Income Uncertainty 77 10.1 First Best 77 10.2 Competitive Equilibrium 78 10.3 Moral Hazard 79 Chapter 11: Life Insurance and Differentiated Annuities 81 11.1 Bequests and Annuities 81 11.2 First Best 83 11.3 Separating Equilibrium 84 11.4 Pooling Equilibrium 84 11.5 Period-certain Annuities and Life Insurance 87 11.6 Mixed Pooling Equilibrium 90 11.7 Summary 93 Appendix 94 Chapter 12: Annuities, Longevity, and Aggregate Savings 97 12.1 Changes in Longevity and Aggregate Savings 97 12.2 Longevity and Individual Savings 98 12.3 Longevity and Aggregate Savings 98 12.4 Example: Exponential Survival Function 102 12.5 No Annuities 103 12.6 Unintended Bequests 104 Appendix 106 Chapter 13: Utilitarian Pricing of Annuities 109 13.1 First-best Allocation 109 13.2 Competitive Annuity Market with Full Information 112 13.3 Second-best Optimum Pricing of Annuities 113 Appendix 116 Chapter 14: Optimum Taxation in Pooling Equilibria 118 14.1 Introduction 118 14.2 Equilibrium with Asymmetric Information 119 14.3 Optimum Commodity Taxation 122 14.4 Optimum Taxation of Annuities 125 Appendix 129 Chapter 15: Bundling of Annuities and Other Insurance Products 131 15.1 Introduction 131 15.2 Example 132 Chapter 16: Financial Innovation--Refundable Annuities (Annuity Options) 135 16.1 The Timing of Annuity Purchases 135 16.2 Sequential Annuity Market Equilibrium Under Survival Uncertainty 137 16.3 Uncertain Future Incomes: Existence of a Separating Equilibrium 140 16.4 Refundable Annuities 144 16.5 A Portfolio of Refundable Annuities 146 16.6 Equivalence of Refundable Annuities and Annuity Options 147 Appendix 150 References 153 Index 157

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Book SynopsisThe three main missions of any organism - growing, reproducing, and surviving - depend on encounters with food and mates, and on avoiding encounters with predators. This book offers a mechanistic approach to the study of ocean ecology by exploring biological interactions in plankton at the individual level.Trade Review"I found the ordering and summary of materials, especially those applying encounter theories directly, to be helpful in ordering my own thinking. The ideas will be broadly familiar to experts in the field, but Kiorboe's clean, direct presentations pull them together in a rewarding way; your study time will be well spent. For aspiring experts, this mechanistic approach is important to master, and working through this book will give you a great running start."--Charles B. Miller, Journal of Plankton Research "What could be deadly dull material is enlivened by evocative examples from Kiorboe's extensive observations of plankton... One cannot read this book without gaining a much fuller appreciation of how fluid motion influences life in the sea."--New Biological BooksTable of ContentsList of Illustrations ix List of Tables xiii Preface xv CHAPTER ONE: Introduction 1 1.1 Biological Oceanography--Marine Biology--Ocean Ecology 1 1.2 The Encounter Problem 4 1.3 This Book 8 CHAPTER TWO: Random Walk and Diffusion 10 2.1 Random Walk and Diffusion 10 2.2 Example: Bacterial Motility 14 2.3 Fick's First Law 17 2.4 Diffusion to or from a Sphere 18 2.5 Feeding on Solutes 20 2.6 Maximum and Optimum Cell Size 22 2.7 Diatoms: Large yet Small 24 2.8 Diffusion Feeding 26 2.9 Non- Steady- State Diffusion: Feeding in Nauplii 28 2.10 Bacteria Colonizing a Sphere 30 2.11 Effect of Shape 31 2.12 Flux from a Sphere (or a Point Source): Chemical Signals 32 CHAPTER THREE: Diffusion and Advection 35 3.1 Moving Fluids 35 3.2 Viscosity, Diffusivity, Re, and Pe 35 3.3 Flow around a Sinking Sphere 37 3.4 Mass Transport to a Sinking Sphere 39 3.5 Example: Oxygen Distribution around a Sinking Sphere 40 3.6 Examples: Osmotrophs, Diffusion Feeders, and Bacterial Colonization of Sinking Particles 43 3.7 Eff ect of Turbulence on Mass Transport: Re, Pe, and Sh for Turbulence 45 3.8 Marine Snow Solute Plumes: Small- Scale Heterogeneity 49 3.9 The Chemical Trail: Mate Finding in Copepods 50 CHAPTER FOUR: Particle Encounter by Advection 57 4.1 Direct Interception versus Remote Detection 57 4.2 Particle Encounter by Direct Interception: Flagellate Feeding 58 4.3 Bacteria Colonizing Particles Revisited: Comparison of Encounter Mechanisms 60 4.4 Direct Interception: Coagulation and Marine Snow Formation 60 4.5 Remote Prey Detection: Encountering Prey in Calm Water 67 4.6 Turbulence and Predator- Prey Encounter Rates 69 4.7 Example: Feeding of the Copepod Acartia tonsa in Turbulence 72 4.8 When Is Turbulence Important for Enhancing Predator-Prey Contact Rates? 74 4.9 On the Downhill Side: Negative Eff ects of Turbulence on Predator-Prey Interactions 75 4.10 Encounter Rates and Motility Patterns: Ballistic versus Diffusive Motility 77 CHAPTER FIVE: Hydromechanical Signals in the Plankton 83 5.1 Copepod Sensory Biology 83 5.2 Decomposition of a Fluid Signal: Deformation and Vorticity 85 5.3 Signal Strength: Prey Perceiving Predator 87 5.4 Signal Strength: Predator Perceiving Prey 88 5.5 To What Flow Components Does a Copepod Respond? 89 5.6 Sensitivity to Hydrodynamic Signals 91 5.7 Predator and Prey Reaction Distances: Generation of a Hydrodynamic Signal 91 5.8 Attack or Flee--the Dilemma of a Parasitic Copepod 95 5.9 Maximal Signals, Optimal Sensitivity, and the Role of Turbulence 96 5.10 The Evolutionary Arms Race 98 CHAPTER SIX: Zooplankton Feeding Rates and Bioenergetics 101 6.1 Functional Response in Ingestion Rate to Prey Concentration 101 6.2 Example: The Functional Response in Oithona davisae 104 6.3 Other Functional Responses 105 6.4 The Components of Predation: Prey Selection 107 6.5 Prey Switching 113 6.6 Bioenergetics: Conversion of Food to Growth and Reproduction 113 6.7 Specific Dynamic Action: Egg Production Effi ciency in a Copepod 115 6.8 Scaling of Feeding and Growth Rates 117 6.9 Feast and Famine in the Plankton 118 CHAPTER SEVEN: Population Dynamics and Interactions 122 7.1 From Individual to Population 122 7.2 The Dynamics of a Single Population: Phytoplankton Blooms 123 7.3 Phytoplankton Population Dynamics and Aggregate Formation 125 7.4 Phytoplankton Growth and Light Limitation 127 7.5 Scaling of Growth and Mortality Rates 128 7.6 Populations with Age Structure: Life Tables 130 7.7 Behavior and Population Dynamics: Critical Population Size and Allee Eff ects 133 7.8 Life- History Strategies 135 7.9 Interacting Populations 140 7.10 From Individual to Population 149 CHAPTER EIGHT: Structure and Function of Pelagic Food Webs 151 8.1 Two Pathways in Pelagic Food Webs 152 8.2 Light and Vertical Mixing: Conditions for Phytoplankton Development 154 8.3 Bud getary Constraints: Nutrient Input and Sinking Flux 155 8.4 Cell Size, Water-Column Structure, and Nutrient Availability: Empirical Evidence 158 8.5 Cell Size and Nutrient Uptake 161 8.6 Cell Size, Turbulence, and Sinking 162 8.7 Cell Size, Turbulence, and Light 164 8.8 Why Are Not All Phytoplankters Small? The Signifi cance of Predation 165 8.9 Hydrodynamic Control of Pelagic Food- Web Structure: Examples 166 8.10 Species Diversity: The Paradox of the Plankton 170 8.11 Fisheries and Trophic Effi ciency 173 8.12 Fertilizing the Ocean--Increasing the Fishery and Preventing Global Warming? 177 References 183 Index 205

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Book SynopsisMoving beyond purely theoretical models, the author applies methods supported by empirical research of equity and foreign exchange markets to show how daily and more frequent asset prices, and the prices of option contracts, can be used to construct and assess predictions about future prices, their volatility, and their probability distributions.Trade ReviewWinner of the 2005 BestBook Award, Riskbook.com "This book provides thorough, well-presented and concise coverage of asset price dynamics and manages to combine new developments, established issues, theory and application in a practical and refreshing manner. It is well illustrated with time series graphs and tables and has a good balance between theoretical concepts and their practical applications with a mathematical treatment that is not too specialized."--Anthony F. Gyles, RSSTable of ContentsPreface xiii Chapter 1: Introduction 1 1.1 Asset Price Dynamics 1 1.2 Volatility 1 1.3 Prediction 2 1.4 Information 2 1.5 Contents 3 1.6 Software 5 1.7 Web Resources 6 PART I: Foundations 7 Chapter 2: Prices and Returns 9 2.1 Introduction 9 2.2 Two Examples of Price Series 9 2.3 Data-Collection Issues 10 2.4 Two Returns Series 13 2.5 Definitions of Returns 14 2.6 Further Examples of Time Series of Returns 19 Chapter 3: Stochastic Processes: Definitions and Examples 23 3.1 Introduction 23 3.2 Random Variables 24 3.3 Stationary Stochastic Processes 30 3.4 Uncorrelated Processes 33 3.5 ARMA Processes 36 3.6 Examples of ARMA 1 1 Specifications 44 3.7 ARIMA Processes 46 3.8 ARFIMA Processes 46 3.9 Linear Stochastic Processes 48 3.10 Continuous-Time Stochastic Processes 49 3.11 Notation for Random Variables and Observations 50 Chapter 4: Stylized Facts for Financial Returns 51 4.1 Introduction 51 4.2 Summary Statistics 52 4.3 Average Returns and Risk Premia 53 4.4 Standard Deviations 57 4.5 Calendar Effects 59 4.6 Skewness and Kurtosis 68 4.7 The Shape of the Returns Distribution 69 4.8 Probability Distributions for Returns 73 4.9 Autocorrelations of Returns 76 4.10 Autocorrelations of Transformed Returns 82 4.11 Nonlinearity of the Returns Process 92 4.12 Concluding Remarks 93 4.13 Appendix: Autocorrelation Caused by Day-of-the-Week Effects 94 4.14 Appendix: Autocorrelations of a Squared Linear Process 95 PART II: Conditional Expected Returns 97 Chapter 5: The Variance-Ratio Test of the Random Walk Hypothesis 99 5.1 Introduction 99 5.2 The Random Walk Hypothesis 100 5.3 Variance-Ratio Tests 102 5.4 An Example of Variance-Ratio Calculations 105 5.5 Selected Test Results 107 5.6 Sample Autocorrelation Theory 112 5.7 Random Walk Tests Using Rescaled Returns 115 5.8 Summary 120 Chapter 6: Further Tests of the Random Walk Hypothesis 121 6.1 Introduction 121 6.2 Test Methodology 122 6.3 Further Autocorrelation Tests 126 6.4 Spectral Tests 130 6.5 The Runs Test 133 6.6 Rescaled Range Tests 135 6.7 The BDS Test 136 6.8 Test Results for the Random Walk Hypothesis 138 6.9 The Size and Power of Random Walk Tests 144 6.10 Sources of Minor Dependence in Returns 148 6.11 Concluding Remarks 151 6.12 Appendix: the Correlation between Test Values for Two Correlated Series 153 6.13 Appendix: Autocorrelation Induced by Rescaling Returns 154 Chapter 7: Trading Rules and Market Efficiency 157 7.1 Introduction 157 7.2 Four Trading Rules 158 7.3 Measures of Return Predictability 163 7.4 Evidence about Equity Return Predictability 166 7.5 Evidence about the Predictability of Currency and Other Returns 168 7.6 An Example of Calculations for the Moving-Average Rule 172 7.7 Efficient Markets: Methodological Issues 175 7.8 Breakeven Costs for Trading Rules Applied to Equities 176 7.9 Trading Rule Performance for Futures Contracts 179 7.10 The Efficiency of Currency Markets 181 7.11 Theoretical Trading Profits for Autocorrelated Return Processes 184 7.12 Concluding Remarks 186 PART III: Volatility Processes 187 Chapter 8: An Introduction to Volatility 189 8.1 Definitions of Volatility 189 8.2 Explanations of Changes in Volatility 191 8.3 Volatility and Information Arrivals 193 8.4 Volatility and the Stylized Facts for Returns 195 8.5 Concluding Remarks 196 Chapter 9: ARCH Models: Definitions and Examples 197 9.1 Introduction 197 9.2 ARCH(1) 198 9.3 GARCH 1 1 199 9.4 An Exchange Rate Example of the GARCH 1 1 Model 205 9.5 A General ARCH Framework 212 9.6 Nonnormal Conditional Distributions 217 9.7 Asymmetric Volatility Models 220 9.8 Equity Examples of Asymmetric Volatility Models 222 9.9 Summary 233 Chapter 10: ARCH Models: Selection and Likelihood Methods 235 10.1 Introduction 235 10.2 Asymmetric Volatility: Further Specifications and Evidence 235 10.3 Long Memory ARCH Models 242 10.4 Likelihood Methods 245 10.5 Results from Hypothesis Tests 251 10.6 Model Building 256 10.7 Further Volatility Specifications 261 10.8 Concluding Remarks 264 10.9 Appendix: Formulae for the Score Vector 265 Chapter 11: Stochastic Volatility Models 267 11.1 Introduction 267 11.2 Motivation and Definitions 268 11.3 Moments of Independent SV Processes 270 11.4 Markov Chain Models for Volatility 271 11.5 The Standard Stochastic Volatility Model 278 11.6 Parameter Estimation for the Standard SV Model 283 11.7 An Example of SV Model Estimation for Exchange Rates 288 11.8 Independent SV Models with Heavy Tails 291 11.9 Asymmetric Stochastic Volatility Models 293 11.10 Long Memory SV Models 297 11.11 Multivariate Stochastic Volatility Models 298 11.12 ARCH versus SV 299 11.13 Concluding Remarks 301 11.14 Appendix: Filtering Equations 301 PART IV: High-Frequency Methods 303 Chapter 12: High-Frequency Data and Models 305 12.1 Introduction 305 12.2 High-Frequency Prices 306 12.3 One Day of High-Frequency Price Data 309 12.4 Stylized Facts for Intraday Returns 310 12.5 Intraday Volatility Patterns 316 12.6 Discrete-Time Intraday Volatility Models 321 12.7 Trading Rules and Intraday Prices 325 12.8 Realized Volatility: Theoretical Results 327 12.9 Realized Volatility: Empirical Results 332 12.10 Price Discovery 342 12.11 Durations 343 12.12 Extreme Price Changes 344 12.13 Daily High and Low Prices 346 12.14 Concluding Remarks 348 12.15 Appendix: Formulae for the Variance of the Realized Volatility Estimator 349 PART V: Inferences from Option Prices 351 Chapter 13: Continuous-Time Stochastic Processes 353 13.1 Introduction 353 13.2 The Wiener Process 354 13.3 Diffusion Processes 355 13.4 Bivariate Diffusion Processes 359 13.5 Jump Processes 361 13.6 Jump-Diffusion Processes 363 13.7 Appendix: a Construction of the Wiener Process 366 Chapter 14: Option Pricing Formulae 369 14.1 Introduction 369 14.2 Definitions, Notation, and Assumptions 370 14.3 Black-Scholes and Related Formulae 372 14.4 Implied Volatility 378 14.5 Option Prices when Volatility Is Stochastic 383 14.6 Closed-Form Stochastic Volatility Option Prices 388 14.7 Option Prices for ARCH Processes 391 14.8 Summary 394 14.9 Appendix: Heston's Option Pricing Formula 395 Chapter 15: Forecasting Volatility 397 15.1 Introduction 397 15.2 Forecasting Methodology 398 15.3 Two Measures of Forecast Accuracy 401 15.4 Historical Volatility Forecasts 403 15.5 Forecasts from Implied Volatilities 407 15.6 ARCH Forecasts that Incorporate Implied Volatilities 410 15.7 High-Frequency Forecasting Results 414 15.8 Concluding Remarks 420 Chapter 16: Density Prediction for Asset Prices 423 16.1 Introduction 423 16.2 Simulated Real-World Densities 424 16.3 Risk-Neutral Density Concepts and Definitions 428 16.4 Estimation of Implied Risk-Neutral Densities 431 16.5 Parametric Risk-Neutral Densities 435 16.6 Risk-Neutral Densities from Implied Volatility Functions 446 16.7 Nonparametric RND Methods 448 16.8 Towards Recommendations 450 16.9 From Risk-Neutral to Real-World Densities 451 16.10 An Excel Spreadsheet for Density Estimation 458 16.11 Risk Aversion and Rational RNDs 461 16.12 Tail Density Estimates 464 16.13 Concluding Remarks 465 Symbols 467 References 473 Author Index 503 Subject Index 513

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Book SynopsisArgues that a just international economy would be one that is inclusive, participatory, and welfare-enhancing for all states. This book asserts that a politically feasible approach to international economic justice would emphasize free trade and limited flows of foreign assistance in order to help countries exercise their comparative advantage.Trade Review"Anyone who wants an introduction to questions of moral economic philosophy would do well to start with his book. Kapstein writes in lucid prose, without the turgidity that often renders the subject as inviting as a cold bath. He makes a long-overdue challenge to the West's consensus that the aim of aid and of developing countries' own development efforts should be to reduce poverty, and that this reduction should be achieved not via industrialization and economic growth but by policies focused on poverty."-- Robert H. Wade, Foreign Affairs "[This] is a stimulating, well-researched book combining economic analysis, political philosophy, and contemporary policy... It [has] an ambitious theme and the author pursues it with originality."--Richard Jolly, Ethics and International Affairs "As Economic Justice in an Unfair World is perhaps the only truly complete philosophical treaty on economic justice that has come out of academia in the last twenty years, this book simultaneously marks the rebirth of ethics as a field of relevance and injects long overdue academic rigour into the often emotionally driven overly populist debate about globalization... [A] real must-read for anyone interested in the frontiers of economics and philosophy."--Business & Finance "Economic Justice is an important contribution to the debates on how to level the playing field in international relations."--PsycCRITIQUESTable of ContentsLIST OF TABLES ix PREFACE xi LIST OFA BBREVIATIONS xix CHAPTER ONE: Economic Justice in an Unfair World 1 CHAPTER TWO: Fairness in Trade 45 CHAPTER THREE: Allocating Aid 86 CHAPTER FOUR: Justice in Migration and Labor 114 CHAPTER FIVE: Harnessing Investment 147 CHAPTER SIX: Toward a Level Playing Field: A Policy Agenda 175 NOTES 197 BIBLIOGRAPHY 219 INDEX 235

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Book SynopsisArguing for a revival of the invisible hand of free international trade and global capital, the author defends the view that statist attempts to ameliorate the impact of markets threaten global economic progress and stability. He contends that capitalism doesn't have to lead to Westernization, as the examples of Japan, China, and India show.Trade ReviewOne of Choice's Outstanding Academic Titles for 2006 "Deepak Lal has provided us with a stirring, even vehement, argument for the restoration of classical liberalism."--Tim Worstall, Daily Telegraph "If Deepak Lal did not exist, I have no doubt it would be necessary to invent him. A highly accomplished technical economist with an excellent reputation, Lal is also the most formidable and forthright champion of classical liberal economic thinking."--David Smith, World Business "Deepak Lal's book reviews modern development economics from a free market perspective... Mr. Lal demonstrates that in spite of the defeat of communism, many Western special interests still introduce rheumatism into the invisible hand of the free market."--Martin Hutchinson, Washington Times "Deepak Lal gives us a fiery refresher course not just in the virtues of the free market, but on the classical liberal outlook on life."--George Walden, Sunday Telegraph "Lal covers an immense amount of ground, from the theory of international trade to the differences between Michael Oakeshott's conservative opposition to the 'enterprise state' and that of the classical liberal Friedrich Hayek."--Samuel Brittan, Financial Times "Deepak Lal effectively points out that just about every goal held dear by those who call themselves radicals and progressives is best reached by exactly the opposite policy prescriptions that they put forward. Indeed, we can go further and point out that the best methods of reaching those goals are in fact the truly liberal ones, those laid out all those decades ago by Adam Smith, David Hume and David Ricardo... [T]his book can and should be a rallying point for those of us who are indeed liberal, radical and progressive."--Tim Worstall, Technology Commerce Society Daily "This book gives a coherent and lucid account of classical liberal theory and argues a case for reviving the invisible hand. Lal's stands on 'trickle down' effect, relevance of the IMF, World Bank and the WTO, genetically modified food and government interventions to achieve equity are contentious. I hope this book generates informed public debates on these issues."--U. Sankar, The Hindu "An erudite and spirited defense of the only approach to public policy that has brought mankind sustained economic growth, widespread alleviation of poverty, and embedded respect for the worth and dignity of the individual."--Economic Affairs "A wide ranging and spirited defense of classical liberalism as an organizing principle for the economic affairs of the world... Provides a nice blend of personal anecdote, literature review, economic argumentation, and broad empirical evidence."--Douglas Irwin, Journal of Economic Literature "Deepak Lal's Reviving the Invisible Hand, an uncompromising and insightful defense of the classical-liberal case for laissez-faire capitalism and free trade that should be on every liberal's shelf. It begins with a brief history of capitalism, explains its fundamental principles, examines the threats it faces, and proposes ways in which the threats may be met intellectually and politically. Capitalism's great enemy, socialism, is thought by many to be dead, but as Lal shows, dirigisme is alive and well. The book is crammed with facts, broad-brush accounts, nuanced technical arguments, brutal critiques, and bold prophecies. Themes are interwoven and repeated. The author apparently aimed to stamp out every misconception about capitalism ... in a single book. This ... offers the reader an encyclopedic amount of material within a medium size volume."--Suri Ratnapala, Independent Institute "This is a thoughtful, well-researched and challenging book. It has a deep historical perspective and offers a broad coverage of the continuing battles between regulation and deregulation, free and managed trade, and between liberty and equality."--Adrian Davies, Long-Range Planning "[E]ntertaining to read... Anyone seeking relief from the smarmier-thall-thou politics of our day will find this an agreeably provocative book."--George Walden, SevenTable of ContentsPREFACE ix Introduction: The Origins of "Capitalism" 1 Globalization 9 Chapter 1: Liberal International Economic Orders 17 Mercantilism 20 The Nineteenth-Century LIEO 22 Pax Britannica and Economic Development 32 The End of the First LIEO 36 Recreating a New LIEO 40 Chapter 2: From Laissez Faire to the Dirigiste Dogma 48 Classical Liberalism and Laissez Faire 48 Poverty and Industrialization in Nineteenth-Century Britain 52 "Manna from Heaven" Distributivism 53 Competition and Monopoly 56 The Rise of "Embedded Liberalism" in the United States 59 Chapter 3: The Changing Fortunes of Free Trade 62 The Rise, Fall, and Rise of Free Trade 62 U.S. Economic Policy 65 The New Protectionism 68 The Rise of Preferential Trading Arrangements 71 Another Globalization Backlash? 80 Adjustment Assistance? 85 Whither the WTO? 86 APPENDIX: FREE TRADE AND LAISSEZ FAIRE IN THEORY 91 Chapter 4: Money and Finance 95 International Monetary Regimes 97 International Capital Flows 105 The Global Financial Infrastructure 122 Chapter 5: Poverty and Inequality 127 Poverty Head Counts 128 Income Gaps 135 Foreign Aid 139 Chapter 6: Morality and Capitalism 150 Introduction 150 Analytical Framework 151 Changing Material and Cosmological Beliefs 154 Communalism versus Individualism 157 From Victorian Virtues to Modern Values 160 Modernization and Westernization 165 Conclusions 180 Chapter 7: "Capitalism with a Human Face" 182 Introduction 182 Justice and Freedom 183 Rights 185 Social Paternalism and Dirigisme 187 Moral Paternalism and the New Victorians 189 Capitalism and Happiness 192 The Corporation under Attack 195 Conclusions 203 Chapter 8: The Greens and Global Disorder 205 Introduction 205 The Rise of the NGOs 205 Sustainable Development 211 The Greens and Ecological Imperialism 214 Toward World Disorder 227 Chapter 9: Conclusions 231 Notes 237 Bibliography 279 Index 307

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Book SynopsisArgues that financial globalization is essential for poor nations to become rich. This book argues that an effectively managed financial globalization promises benefits on the scale of the hugely successful trade and information globalizations of the nineteenth and twentieth centuries.Trade Review"This is an excellent, easy-to-understand and well-written exposition of the benefits of financial globalization, persuasively setting out the case for financial liberalization in developing countries--against the tidal wave of much current academic thinking on the matter."--Nigel Grimwade, Times Higher Education Supplement "Frederic Mishkin ... argues in an important new book, foreign capital can bring big gains at the microeconomic level: more competition, new technology and modern managerial know-how. Inflows of foreign direct investment into the financial system itself are particularly valuable to an emerging country."--Financial Times "Frederic S. Mishkin ... argues that when handled with proper safeguards, financial openness can confer many benefits that are often overlooked, like reducing corruption and busting up local monopolies and business oligarchies."--Paul Blustein, Washington Post "The next great globalization, according to Frederic Mishkin's new book ... will be financial in character: the flow of foreign money into stocks, bonds and banking in emerging economies... Mr. Mishkin makes a clear and compact case for cosmopolitan capital; and his footnotes ... weigh and tally a wealth of economic research."--The Economist "In this economic equivalent of tough love, Mishkin seldom uses a qualifying phrase. The premise is crystal clear: choose the path of globalization that leads to economic development, higher income levels, and general prosperity, or choose the path of globalization that leads to stagnation, stasis, and lower living standards... Advocates of free trade will nod their heads in agreement, and opponents will find plenty of food for thought."--Choice "The Next Great Globalization is a compelling read for anyone with an interest in the real-life complexities of economic development, and its focus on the often overlooked or maligned role of financial institutions is very welcome."--Diane Coyle, International Affairs "Offers a plan for reform of developing nations' banking systems... Valuable--and achievable--recommendations for change... The Next Great Globalization describes the failings of the International Monetary Fund well, in part a result of Mishkin's experience as an outside evaluator of the organization."--BusinessWeek "This book addresses an important global problem: the low state of development experienced by much of the world's population, and it makes a valuable contribution to the development literature by focusing on domestic institutions. Moreover, while most economic discussion about institutions is highly abstract, Mishkin focuses on financial institutions."--Eva Marikova Leeds, Eastern Economic Journal "This book by a prominent economist and Fed Governor provides invaluable insights into the financial development process, drawing on theoretical research and country experiences to distill the lessons for policymakers. It explains how globalization--both real and financial--can bring prosperity, stability, and wealth to emerging market countries that put in place the necessary institutional reforms when liberalizing their financial systems. The Next Great Globalization is intended not just for economists but also for broader audiences with an interest in financial issues."--Miranda Xafa, World Economics "This is a workmanlike book written in plain English about an important but currently controversial subject: financial globalization. Its judgements are, by and large, sound... [I]t is ... worthwhile to have the traditional virtues of financial globalization set out simply and clearly."--Deepak Lal, International History Review "This book's arguments are backed by sound economic research, and there are important policy lessons to be learned. The material will be valuable for economists and policymakers across the world, but particularly to those working in developing countries and at international financial institutions."--Jose R. Sanchez-Fung, Economic Change and RestructuringTable of ContentsPreface ix Chapter One: The Next Great Globalization: A Force for Good? 1 Part One: Is Financial Globalization Beneficial? Chapter Two: How Poor Countries Can Get Rich: Strengthening Property Rights and the Financial System 19 Chapter Three: Financial Development, Economic Growth, and Poverty 36 Chapter Four: When Globalization Goes Wrong: The Dynamics of Financial Crises 49 Part Two: Financial Crises in Emerging Market Economies Chapter Five: Mexico, 1994-1995 71 Chapter Six: South Korea, 1997-1998 85 Chapter Seven: Argentina, 2001-2002 106 Part Three: How Can Disadvantaged Nations Make Financial Globalization Work for Them? Chapter Eight: Ending Financial Repression: The Role of Globalization 129 Chapter Nine: Preventing Financial Crises 137 Chapter Ten: Recovering from Financial Crises 164 Part Four: How Can the International Community Promote Successful Globalization? Chapter Eleven: What Should the International Monetary Fund Do? 175 Chapter Twelve: What Can the Advanced Countries Do? 200 Part Five: Where Do We Go from Here? Chapter Thirteen: Getting Financial Globalization Right 211 Notes 221 References 277 Acknowledgments 305 Index 307

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Book SynopsisThe crash of 2008 revealed that the world's central banks had failed to offset the financial imbalances that led to the crisis, and lacked the tools to respond effectively. This title provides an insider's look into how central banks have evolved and why they are critical to the functioning of market economies.Trade ReviewNamed one of Financial Times (FT.com)'s Books of the Year in Nonfiction Round-Up in the Business & Economics list for 2010 "[T]he depth of its analysis will make Banking on the Future an important source of insights for years to come."--Ed Crooks, Financial Times "The best assessment yet of the role played by the leading western central banks--the U.S. Federal Reserve, the ECB and the Bank of England--in the run-up to the financial crisis and beyond, from two former insiders at the top level of UK policymaker."--Financial Times (FT Critics Pick 2010) "Buy the book with confidence."--Jane Fuller, Financial World "Books on central banking usually vie with pills as sleep inducers, but Banking on the Future: The Fall and Rise of Central Banking is actually a page-turner."--Andrew Allentuck, National Post "In this forensic and engaging overview, Susan Hough presents a frank, entertaining and personal review of the history of ideas, practice, personalities and experience in the science of earthquake prediction. Although Hough is a respected scientist, she takes a journalist's viewpoint here, not shying away from legitimate criticism of those she regards as friends, and taking on the credulous at the edge of, or even beyond, the mainstream scientific."--Ian Main, Times Higher Education "[A] valuable, accessible volume... This clear, nontechnical guide on the present and future of central banking from two eminent policy makers could not have come at a better time."--Choice "A better title for this book would have been: All You Ever Wanted to Know About Central Banking and More... Davies and Green provide much to inform and interest diverse audiences...[I]t's a book that practitioners and students of central banking need to have on their shelf."--Management Today "We get an insider's view of the nuts and bolts of central banking, but not so inside that the authors are uncritical. They readily identify the pressure to change regulations or advice when regulators feel under pressure to display expertise in new issues... These are snippets of insight that only critical insiders know how to capture."--Dick Bryan, Australian Review of Public AffairsTable of ContentsPreface vii Abbreviations ix Introduction 1 Chapter One: What Is Central Banking and Why Is It Important? 9 Chapter Two: Monetary Stability 23 Chapter Three: Financial Stability 52 Chapter Four: Financial Infrastructure 90 Chapter Five: Asset Prices 115 Chapter Six: Structure, Status, and Accountability 141 Chapter Seven: Europe: A Special Case 182 Chapter Eight: Central Banking in Emerging Market Countries 212 Chapter Nine: Financial Resources, Costs, and Efficiency 236 Chapter Ten: International Cooperation 252 Chapter Eleven: Leadership 270 Chapter Twelve: An Agenda for Change 285 Afterword 297 Notes 301 Index 317

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Book SynopsisTraces Treasury Secretary William Gibbs McAdoo's triumph over a monetary crisis at the outbreak of World War I that threatened the United States with financial disaster. This title recreates the drama of America's battle for financial credibility.Trade Review"An insightful new book by William L. Silber ... argues that the closing of the New York Stock Exchange at the outbreak of World War I played a critical role... The conventional view was that the exchange was closed to keep share prices from plunging. But the book, When Washington Shut Down Wall Street, asserts that the historians--and contemporary observers--had it wrong... By delaying the reopening of Wall Street and making sure that American grain was ready to be exported to Europe to bring in gold, the United States was able to stay on the gold standard and become an alternative to London as a financial capital."--Floyd Norris, New York Times "In his fascinating work of financial history, When Washington Shut Down Wall Street, William L. Silber recounts the heroics of Treasury Secretary William McAdoo, who closed the New York Stock Exchange for more than four months--four months!--in 1914 to avert a larger economic crisis... It was, as Silber explains, a brilliant exercise of arbitrary power that helped propel the United States toward global financial supremacy."--Carlos Lozada, Washington Post "It is an engaging story; part economic history, part how-to manual on dealing with financial crises... William Silber's main contention ... is well taken. It takes a lot to uproot an incumbent world financial leader. Potential rivals need to be smart enough to take advantage if and when a moment of opportunity arises--a moment that almost by definition will be one of global financial crisis."--Krishna Guha, Financial Times "[This] lively new book by New York University economist William Silber, When Washington Shut Down Wall Street, makes a convincing plea for the inclusion of William McAdoo in the Dollar Pantheon."--Daniel Gross, Slate.com "Reading Silber's tale of unintended consequences is as close as one gets to a historical 'thriller.' At the same time, one can't help but reflect on the challenges ahead. A 'rebalancing' of the world economy in today's environment will be much more complex than was the case in 1914. As then, the outcomes are unlikely to follow popular predictions. In this respect, as well as in providing a fascinating historical account of a major financial and political drama, Silber does any reader great service."--Edward Waitzer, Financial Regulator "More than just a ripping yarn--and it is that--[When Washington Shut Down Wall Street] is a cautionary tale of how humankind can get suckered into so believing economic myths that they take on a dangerous reality."--James Srodes, The Washington Times "When I first picked up this book, I wondered whether it described events so long ago that they were irrelevant today and whether it would be written in such an academic fashion as to be turgid and unreadable for the ordinary mortal interested in business and a good read. Well, I was wrong on both counts."--Richard Keatinge, Irish Times "This short volume tells the intriguing tale of how the financial crisis wrought by Europe's plunge into World War I opened the door to America's emergence as the world's dominant financial and economic power. Few writers have paid much attention to the closing of the Exchange, except as a curiosity exemplifying the shock experienced by Americans when the war came. Silber has done historians a favor by placing that event in a context that reveals its broader significance."--Maury Klein, Business History Review "When Washington Shut Down Wall Street is a thrilling yet compact financial history of events surrounding the crisis at the outbreak of the first world war... Overall, it's well-written and articulate, and one of the historical financial reads of the year that also offers a blueprint for the future, outlining Silber's words the legacy of 1913 and what that year can teach us about crisis management, even in today's gloomy economic outlook."--Paul O'Doherty, The Investor "Economist William L. Silber has written a fascinating account ... that may appeal to students of banking and finance interested in leadership and crisis control."--Alfred E. Eckes, International History Review "[A] wonderful book of financial history."--Christopher Farrell, MarketplaceTable of ContentsAcknowledgments xi Introduction: The Legacy of 1914 1 Chapter One: The Opening Salvo 8 Chapter Two: The European Gold Rush 26 Chapter Three: The Nightmare of 1907 42 Chapter Four: Unlocking Emergency Currency 66 Chapter Five: Sterling Steals the Spotlight 86 Chapter Six: New Street Defies McAdoo 104 Chapter Seven: Rescue 116 Chapter Eight: End Game 131 Chapter Nine: Birth of a Financial Superpower 151 Epilogue: Blueprint for Crisis Control 173 Notes 177 References 201 Index 207

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Book SynopsisComplements theoretical analysis with detailed discussions of the empirics of the economics of agglomeration, offering a mix of theoretical and empirical research that gives a fresh perspective on spatial disparities. This book provides an introduction to economic geography and includes history and background of the field of spatial economics.Trade Review"Economic Geography: The Integration of Regions and Nations is an outstanding contribution to the field... Even those most familiar with the economic geography literature will emerge from reading the book challenged, engaged, and enlightened."--Donald R. Davis, Journal of International Economics "The book delivers important insights into the theories and practices of economic geography and opens opportunities for new avenues of research, by providing extensions of the existing theoretical models which can form the basis of new applications and tests to these theories... [T]his book is highly recommended for both academic and graduates."--Vitor Braga, Economic Geography Research Group "[T]he book by Combes et al. gives an excellent overview of identification, estimation, omitted variables, reverse causality, sorting and evaluation issues related to geographical economics modeling outcomes as well as urban economics and interaction modeling outcomes. Empirical researchers will appreciate the overviews given here."--Frank Van Oort, Regional StudiesTable of ContentsForeword xiii Acknowledgments xxiv Part I: Facts and Theories 1 CHAPTER 1: Spatial Inequalities: A Brief Historical Overview 3 1.1 The Space-Economy and the Industrial Revolution 4 1.2 Regional Disparities: When an Ancient Phenomenon Becomes Measurable 12 1.3 Concluding Remarks 25 CHAPTER 2: Space in Economic Thought 26 2.1 Economics and Geography: A Puzzling History of Reciprocal Ignorance 27 2.2 Integrating Space in Economics: The Main Attempts 30 2.3 The Burden of Modeling Constraints 31 2.4 The Breakdown of the Competitive Paradigm in a Spatial Economy 35 2.5 What Are the Alternative Modeling Strategies? 41 2.6 Increasing Returns and Transport Costs: The Basic Trade-Off of Economic Geography 43 2.7 Concluding Remarks 48 Part II: Space, Trade, and Agglomeration 51 CHAPTER 3: Monopolistic Competition 53 3.1 The Dixit-Stiglitz Approach 55 3.2 Monopolistic Competition: A Linear Setting 71 3.3 Concluding Remarks 79 3.4 Related Literature 80 CHAPTER 4: Interregional Trade and Market Size 81 4.1 The Dixit-Stiglitz-Krugman Model of Trade 82 4.2 The Home-Market Effect 89 4.3 Concluding Remarks 98 4.4 Related Literature 100 CHAPTER 5: Gravity and Trade Costs 101 5.1 The Gravity Model 103 5.2 Trade Costs 115 5.3 Concluding Remarks 127 5.4 Related Literature 127 CHAPTER 6: The Core-Periphery Structure 130 6.1 Increasing Returns and Industrialization 133 6.2 Regional Disparities: The Krugman Model 137 6.3 The Krugman Model Revisited 160 6.4 Concluding Remarks 162 6.5 Related Literature 164 CHAPTER 7: Intermediate Goods and the Evolution of Regional Disparities 166 7.1 The Role of Intermediate Goods 169 7.2 The Spatial Distribution of the Manufacturing Sector 176 7.3 The Evolution of Regional Disparities 185 7.4 Concluding Remarks 191 7.5 Related Literature 192 CHAPTER 8: The Bell-Shaped Curve of Spatial Development 194 8.1 A Linear Core-Periphery Model 196 8.2 When Does the Bell-Shaped Curve Arise? 207 8.3 Concluding Remarks 221 8.4 Related Literature 222 CHAPTER 9: Spatial Competition 223 9.1 Spatial Duopoly a la Hotelling 224 9.2 Spatial Oligopoly a la Cournot 238 9.3 Concluding Remarks 250 9.4 Related Literature 251 Part III: Breadth and Determinants of Spatial Concentration 253 CHAPTER 10: Measuring Spatial Concentration 255 10.1 The Properties of an Ideal Index of Spatial Concentration 256 10.2 Spatial Concentration Indices 259 10.3 Indices Accounting for Industrial Concentration 266 10.4 The Duranton-Overman Continuous Approach 269 10.5 Concluding Remarks 274 10.6 Related Literature 274 CHAPTER 11: Determinants of Spatial Concentration and Local Productivity 276 11.1 The Determinants of Spatial Concentration 277 11.2 The Determinants of Local Productivity 283 11.3 Concluding Remarks 300 11.4 Related Literature 301 CHAPTER 12: The Empirics of Economic Geography 302 12.1 A General Framework 303 12.2 Location of Firms 307 12.3 Home-Market Effect 314 12.4 Factor Prices and Economic Geography 321 12.5 Migrations 329 12.6 The Stability of Spatial Patterns 332 12.7 Concluding Remarks 340 12.8 Related Literature 342 CHAPTER 13: Theory with Numbers 343 13.1 Predictions Based on the Dixit-Stiglitz-Krugman Model 345 13.2 Simulations in an Estimated Model of the French Space-Economy 356 13.3 Concluding Remarks 363 13.4 Related Literature 364 CHAPTER 14: Concluding Remarks 365 14.1 The Paradox of the Global Village 365 14.2 The Objective of Economic Geography 367 14.3 What Have We Learned? 368 14.4 Where Next? 374 References 379 Index 397

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Book SynopsisThe handbook of experimental economics v. 2.Trade Review"This book is impressive for the clarity, depth, and informativeness of its surveys. The focus on series of experiments is very instructive... One can learn a lot from the issues debated, the methodological digressions, and the many suggestions for further research... This is a great book that is wholeheartedly recommended."--F. van Winden, The Journal of Economics "The book provides not only a comprehensive and deep review of major areas of experimental research, but it is also exceptionally intellectually stimulating and insightful for theoretical economists as well as those who are interested in more immediate policy issues."--Katerina Sherstyuk, Economic Record "This is a book written principally to demonstrate the considerable scope and potential of economics experiments, and it achieves that objective very well."--Graham Loomes, The Times Higher Education Supplement "A critical review and analysis of the foundations of laboratory experiments in economics, and much more... Indeed, this handbook serves as a thoughtful agenda for future researchers... "--Choice "Several chapters, including those on neuroeconomics, political economy, and learning, have applications beyond economics to psychology and political science, a reminder of the growing role of interdisciplinarity in the social sciences. An excellent volume with extensive references."--ChoiceTable of Contents*Frontmatter, pg. i*CONTENTS, pg. v*PREFACE, pg. xiii*1. Macroeconomics: A Survey of Laboratory Research, pg. 1*2. Using Experimental Methods to Understand Why and How We Give to Charity, pg. 91*3. Neuroeconomics, pg. 153*4. Other-Regarding Preferences, pg. 217*5. Experiments in Market Design, pg. 290*6. Experiments in Political Economy, pg. 347*7. Experimental Economics across Subject Populations, pg. 435*8. Gender, pg. 481*9. Auctions, pg. 563*10. Learning and the Economics of Small Decisions, pg. 638*EDITORS AND CONTRIBUTORS, pg. 717*ILLUSTRATION CREDITS, pg. 721*NAME INDEX, pg. 725*SUBJECT INDEX, pg. 737

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Book SynopsisEconometric models are widely used in the creation and evaluation of economic policy in the public and private sectors. This book addresses the critical earlier stage of model development, the point at which potential models are inherently incomplete.Trade Review"This book is original and powerful. It develops a Bayesian paradigm that embraces the reality of applied modeling, in which 'discoveries' of things previously unimagined are made regularly. It will be of immediate interest to all economists and statisticians who want to push Bayesian principles toward innovative practice (and who doesn't?)."—Francis X. Diebold, University of Pennsylvania"How do we know whether a statistical model is good enough for a particular economic research problem? To answer this question, John Geweke introduces the concept of incomplete models, showing how they can be effective tools for model building. This book is a significant contribution to econometrics—and a pleasure to read."—Richard Paap, Erasmus University Rotterdam"This excellent book seamlessly links many important econometric methods, models, and concepts."—Gary Koop, University of StrathclydeTable of ContentsSeries Editors' Introduction vii Preface ix Chapter 1: Introduction 1 Chapter 2: The Bayesian Paradigm 7 2.1 Complete Models 10 2.2 Model Comparison and Averaging 16 2.3 Simulation 19 2.4 Model Evaluation 23 Chapter 3: Prior Predictive Analysis and Model Evaluation 34 3.1 Data and Models 35 3.2 Prior Predictive Analysis 47 3.3 Comparison with an Incomplete Model 71 3.4 Appendix: A Gaussian Copula for Evaluating Predictive Densities of Vector Functions of Interest 84 Chapter 4: Incomplete Structural Models 86 4.1 The Essential Elements of DSGE Models 88 4.2 Strong Econometric Interpretation 95 4.3 Weak Econometric Interpretation 98 4.4 Minimal Econometric Interpretation 109 4.5 Implications for Structural Modeling 118 Chapter 5: An Incomplete Model Space 122 5.1 Context and Motivation 123 5.2 Pools of Two Models 130 5.3 Examples of Two-Model Pools 135 5.4 Pools of Multiple Models 142 5.5 Multiple-Model Pools: An Example 150 5.6 Pooling and Model Improvement 155 5.7 Consequences of an Incomplete Model Space 158 References 161

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Book SynopsisFocusing on evolutionary game theory, this textbook shows students how to apply game theory to model human behavior in ways that reflect the special nature of sociality and individuality. It also includes solutions to the problems presented and information related to agent-based modeling.Trade Review"Gintis has wholeheartedly embraced the evolutionary approach to games... The author is an accomplished economist raised in the classical mold, and his background shows in many aspects of the book ... [He] has important things to say."--Karl Sigmund, Science "Game Theory Evolving is an exceptionally well-written and constructed introduction to the field. And with Gintis' outline of agent-based modeling and his tips for programming, many readers may be motivated to take up his invitation and experiment with a problem in evolutionary dynamics of their own."--Jennifer M. Wilson, Mathematical ReviewsTable of ContentsPreface xv Chapter 1: Probability Theory 1 1.1 Basic Set Theory and Mathematical Notation 1 1.2 Probability Spaces 2 1.3 De Morgan's Laws 3 1.4 Interocitors 3 1.5 The Direct Evaluation of Probabilities 3 1.6 Probability as Frequency 4 1.7 Craps 5 1.8 A Marksman Contest 5 1.9 Sampling 5 1.10 Aces Up 6 1.11 Permutations 6 1.12 Combinations and Sampling 7 1.13 Mechanical Defects 7 1.14 Mass Defection 7 1.15 House Rules 7 1.16 The Addition Rule for Probabilities 8 1.17 A Guessing Game 8 1.18 North Island, South Island 8 1.19 Conditional Probability 9 1.20 Bayes' Rule 9 1.21 Extrasensory Perception 10 1.22 Les Cinq Tiroirs 10 1.23 Drug Testing 10 1.24 Color Blindness 11 1.25 Urns 11 1.26 The Monty Hall Game 11 1.27 The Logic of Murder and Abuse 11 1.28 The Principle of Insufficient Reason 12 1.29 The Greens and the Blacks 12 1.30 The Brain and Kidney Problem 12 1.31 The Value of Eyewitness Testimony 13 1.32 When Weakness Is Strength 13 1.33 The Uniform Distribution 16 1.34 Laplace's Law of Succession 17 1.35 From Uniform to Exponential 17 Chapter 2: Bayesian Decision Theory 18 2.1 The Rational Actor Model 18 2.2 Time Consistency and Exponential Discounting 20 2.3 The Expected Utility Principle 22 2.4 Risk and the Shape of the Utility Function 26 2.5 The Scientific Status of the Rational Actor Model 30 Chapter 3: Game Theory: Basic Concepts 32 3.1 Big John and Little John 32 3.2 The Extensive Form 38 3.3 The Normal Form 41 3.4 Mixed Strategies 42 3.5 Nash Equilibrium 43 3.6 The Fundamental Theorem of Game Theory 44 3.7 Solving for Mixed-Strategy Nash Equilibria 44 3.8 Throwing Fingers 46 3.9 Battle of the Sexes 46 3.10 The Hawk-Dove Game 48 3.11 The Prisoner's Dilemma 50 Chapter 4: Eliminating Dominated Strategies 52 4.1 Dominated Strategies 52 4.2 Backward Induction 54 4.3 Exercises in Eliminating Dominated Strategies 55 4.4 Subgame Perfection 57 4.5 Stackelberg Leadership 59 4.6 The Second-Price Auction 59 4.7 The Mystery of Kidnapping 60 4.8 The Eviction Notice 62 4.9 Hagar's Battles 62 4.10 Military Strategy 63 4.11 The Dr. Strangelove Game 64 4.12 Strategic Voting 64 4.13 Nuisance Suits 65 4.14 An Armaments Game 67 4.15 Football Strategy 67 4.16 Poker with Bluffing 68 4.17 The Little Miss Muffet Game 69 4.18 Cooperation with Overlapping Generations 70 4.19 Dominance-Solvable Games 71 4.20 Agent-based Modeling 72 4.21 Why Play a Nash Equilibrium? 75 4.22 Modeling the Finitely-Repeated Prisoner's Dilemma 77 4.23 Review of Basic Concepts 79 Chapter 5: Pure-Strategy Nash Equilibria 80 5.1 Price Matching as Tacit Collusion 80 5.2 Competition on Main Street 81 5.3 Markets as Disciplining Devices: Allied Widgets 81 5.4 The Tobacco Market 87 5.5 The Klingons and the Snarks 87 5.6 Chess: The Trivial Pastime 88 5.7 No-Draw, High-Low Poker 89 5.8 An Agent-based Model of No-Draw, High-Low Poker 91 5.9 The Truth Game 92 5.10 The Rubinstein Bargaining Model 94 5.11 Bargaining with Heterogeneous Impatience 96 5.12 Bargaining with One Outside Option 97 5.13 Bargaining with Dual Outside Options 98 5.14 Huey, Dewey, and Louie Split a Dollar 102 5.15 Twin Sisters 104 5.16 The Samaritan's Dilemma 104 5.17 The Rotten Kid Theorem 106 5.18 The Shopper and the Fish Merchant 107 5.19 Pure Coordination Games 109 5.20 Pick Any Number 109 5.21 Pure Coordination Games: Experimental Evidence 110 5.22 Introductory Offers 111 5.23 Web Sites (for Spiders) 112 Chapter 6: Mixed-Strategy Nash Equilibria 116 6.1 The Algebra of Mixed Strategies 116 6.2 Lions and Antelope 117 6.3 A Patent Race 118 6.4 Tennis Strategy 119 6.5 Preservation of Ecology Game 119 6.6 Hard Love 120 6.7 Advertising Game 120 6.8 Robin Hood and Little John 122 6.9 The Motorist's Dilemma 122 6.10 Family Politics 123 6.11 Frankie and Johnny 123 6.12 A Card Game 124 6.13 Cheater-Inspector 126 6.14 The Vindication of the Hawk 126 6.15 Characterizing 2 x 2 Normal Form Games I 127 6.16 Big John and Little John Revisited 128 6.17 Dominance Revisited 128 6.18 Competition on Main Street Revisited 128 6.19 Twin Sisters Revisited 129 6.20 Twin Sisters: An Agent-Based Model 129 6.21 One-Card, Two-Round Poker with Bluffing 131 6.22 An Agent-Based Model of Poker with Bluffing 132 6.23 Trust in Networks 133 6.24 El Farol 134 6.25 Decorated Lizards 135 6.26 Sex Ratios as Nash Equilibria 137 6.27 A Mating Game 140 6.28 Coordination Failure 141 6.29 Colonel Blotto Game 141 6.30 Number Guessing Game 142 6.31 Target Selection 142 6.32 A Reconnaissance Game 142 6.33 Attack on Hidden Object 143 6.34 Two-Person, Zero-Sum Games 143 6.35 Mutual Monitoring in a Partnership 145 6.36 Mutual Monitoring in Teams 145 6.37 Altruism(?) in Bird Flocks 146 6.38 The Groucho Marx Game 147 6.39 Games of Perfect Information 151 6.40 Correlated Equilibria 151 6.41 Territoriality as a Correlated Equilibrium 153 6.42 Haggling at the Bazaar 154 6.43 Poker with Bluffing Revisited 156 6.44 Algorithms for Finding Nash Equilibria 157 6.45 Why Play Mixed Strategies? 160 6.46 Reviewing of Basic Concepts 161 Chapter 7: Principal-AgentModels 162 7.1 Gift Exchange 162 7.2 Contract Monitoring 163 7.3 Profit Signaling 164 7.4 Properties of the Employment Relationship 168 7.5 Peasant and Landlord 169 7.6 Bob's Car Insurance 173 7.7 A Generic Principal-Agent Model 174 Chapter 8: Signaling Games 179 8.1 Signaling as a Coevolutionary Process 179 8.2 A Generic Signaling Game 180 8.3 Sex and Piety: The Darwin-Fisher Model 182 8.4 Biological Signals as Handicaps 187 8.5 The ShepherdsWho Never Cry Wolf 189 8.6 My Brother's Keeper 190 8.7 Honest Signaling among Partial Altruists 193 8.8 Educational Signaling 195 8.9 Education as a Screening Device 197 8.10 Capital as a Signaling Device 199 Chapter 9: Repeated Games 201 9.1 Death and Discount Rates in Repeated Games 202 9.2 Big Fish and Little Fish 202 9.3 Alice and Bob Cooperate 204 9.4 The Strategy of an Oil Cartel 205 9.5 Reputational Equilibrium 205 9.6 Tacit Collusion 206 9.7 The One-Stage Deviation Principle 208 9.8 Tit for Tat 209 9.9 I'd Rather Switch Than Fight 210 9.10 The Folk Theorem 213 9.11 The Folk Theorem and the Nature of Signaling 216 9.12 The Folk Theorem Fails in Large Groups 217 9.13 Contingent Renewal Markets Do Not Clear 219 9.14 Short-Side Power in Contingent Renewal Markets 222 9.15 Money Confers Power in Contingent Renewal Markets 223 9.16 The Economy Is Controlled by the Wealthy 223 9.17 Contingent Renewal Labor Markets 224 Chapter 10: Evolutionarily Stable Strategies 229 10.1 Evolutionarily Stable Strategies: Definition 230 10.2 Properties of Evolutionarily Stable Strategies 232 10.3 Characterizing Evolutionarily Stable Strategies 233 10.4 A Symmetric Coordination Game 236 10.5 A Dynamic Battle of the Sexes 236 10.6 Symmetrical Throwing Fingers 237 10.7 Hawks, Doves, and Bourgeois 238 10.8 Trust in Networks II 238 10.9 Cooperative Fishing 238 10.10 Evolutionarily Stable Strategies Are Not Unbeatable 240 10.11 A Nash Equilibrium That Is Not an EES 240 10.12 Rock, Paper, and Scissors Has No ESS 241 10.13 Invasion of the Pure-Strategy Mutants 241 10.14 Multiple Evolutionarily Stable Strategies 242 10.15 Evolutionarily Stable Strategies in Finite Populations 242 10.16 Evolutionarily Stable Strategies in Asymmetric Games 244 Chapter 11: Dynamical Systems 247 11.1 Dynamical Systems: Definition 247 11.2 Population Growth 248 11.3 Population Growth with Limited Carrying Capacity 249 11.4 The Lotka-Volterra Predator-Prey Model 251 11.5 Dynamical Systems Theory 255 11.6 Existence and Uniqueness 256 11.7 The Linearization Theorem 257 11.8 Dynamical Systems in One Dimension 258 11.9 Dynamical Systems in Two Dimensions 260 11.10 Exercises in Two-Dimensional Linear Systems 264 11.11 Lotka-Volterra with Limited Carrying Capacity 266 11.12 Take No Prisoners 266 11.13 The Hartman-Grobman Theorem 267 11.14 Features of Two-Dimensional Dynamical Systems 268 Chapter 12: Evolutionary Dynamics 270 12.1 The Origins of Evolutionary Dynamics 271 12.2 Strategies as Replicators 272 12.3 A Dynamic Hawk-Dove Game 274 12.4 Sexual Reproduction and the Replicator Dynamic 276 12.5 Properties of the Replicator System 278 12.6 The Replicator Dynamic in Two Dimensions 279 12.7 Dominated Strategies and the Replicator Dynamic 280 12.8 Equilibrium and Stability with a Replicator Dynamic 282 12.9 Evolutionary Stability and Asymptotically Stability 284 12.10 Trust in Networks III 284 12.11 Characterizing 2 x 2 Normal Form Games II 285 12.12 Invasion of the Pure-Strategy Nash Mutants II 286 12.13 A Generalization of Rock, Paper, and Scissors 287 12.14 Uta stansburiana in Motion 287 12.15 The Dynamics of Rock, Paper, and Scissors 288 12.16 The Lotka-VolterraModel and Biodiversity 288 12.17 Asymmetric Evolutionary Games 290 12.18 Asymmetric Evolutionary Games II 295 12.19 The Evolution of Trust and Honesty 295 Chapter 13: Markov Economies and Stochastic Dynamical Systems 297 13.1 Markov Chains 297 13.2 The Ergodic Theorem for Markov Chains 305 13.3 The Infinite Random Walk 307 13.4 The Sisyphean Markov Chain 308 13.5 Andrei Andreyevich's Two-Urn Problem 309 13.6 Solving Linear Recursion Equations 310 13.7 Good Vibrations 311 13.8 Adaptive Learning 312 13.9 The Steady State of a Markov Chain 314 13.10 Adaptive Learning II 315 13.11 Adaptive Learning with Errors 316 13.12 Stochastic Stability 317 Chapter 14: Table of Symbols 319 Chapter 15: Answers 321 Sources for Problems 373 References 375

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Book SynopsisWhy are some parts of the world so rich and others so poor? Why did the Industrial Revolution occur in eighteenth-century England, and not at some other time, or in some other place? This title tackles these profound questions and suggests a fresh way in which culture explains the wealth, and the poverty, of nations.Trade ReviewWinner of the 2008 Gold Book Medal in Finance/Investment/Economics, Independent Publisher Book Awards "Right or wrong, or perhaps somewhere in between, Clark's is about as stimulating an account of world economic history as one is likely to find. Let's hope that the human traits to which he attributes economic progress are acquired, not genetic, and that the countries that grow in population over the next 50 years turn out to be good at imparting them. Alternatively, we can simply hope he's wrong."--Benjamin M. Friedman, New York Times Book Review "Clark's idea-rich book may just prove to be the next blockbuster in economics. He offers us a daring story of the economic foundations of good institutions and the climb out of recurring poverty. We may not have cracked the mystery of human progress, but A Farewell to Alms brings us closer than before."--Tyler Cowen, New York Times "[C]lark is very good at piecing together figures from here and there, including those from isolated groups of hunter-gatherers alive today. He makes a plausible case for the basic pattern: for thousands of years before the Industrial Revolution, there was essentially no sustained improvement in mankind's general material standard of living, nor was there much variation from place to place around the world. The Industrial Revolution made all the difference."--Robert Solow, New York Review of Books "A Farewell to Alms asks the right questions, and it is full of fascinating details, like the speed at which information traveled over two millennia (prior to the 19th century, about one mile per hour). Clark's combination of passion and erudition makes his account engaging. When a light bulb goes off in my head, the first thing I ask myself is 'Would this be interest if it were true?' Clark's thesis definitely meets that test."--Samuel Bowles, Science "Mr. Clark...has produced a well written and thought-provoking thesis, refreshingly light on jargon and equations. It could well be the subject of debate for years to come."--The Economist "Gregory Clark's A Farewell to Alms is fully as absorbing, as memorable and as well written as [Jared] Diamond's remarkable bestseller. It deserves to be as widely read... [A]ny book that is as bold, as fascinating, as conscientiously argued and as politically incorrect as this one demands to be read."--Clive Crook, Financial Times "Obviously, we've got a controversial argument here. But Clark makes a compelling case for the idea that the fruits of industrialization were open to all societies, but only a handful seized the moment."--William R. Wineke, The Wisconsin State Journal "Gregory Clark's new book A Farewell to Alms is an investigation of both our nasty, brutish, and short past and our more prosperous present. Mr. Clark first makes the case that we owe our current prosperity to the gifts of the Industrial Revolution. He then attempts to explain why that revolution happened in 18th-century England."--Edward Glaeser, New York Sun "Economic history often conjures images of musty tomes, bygone eras that no one knows about and in general, scholarship that is dry and difficult to relate to. Gregory Clark's new book A Farewell to Alms conveys a different image. Offering a sweep of history from the border between antiquity and the medieval age, the book is an attempt at tackling grand themes."--Siddharth Singh, LiveMint "For a novel and somewhat dispiriting theory of economic divergence, read A Farewell to Alms, published this year, by Gregory Clark of the University of California at Davis. He doesn't accept the view, common among the utopians, that natural endowments like soil and water explain why rich nations are 50 times as prosperous as poor ones. How can differences in natural resources possibly explain Zimbabwe's misery or Singapore's wealth? Clark amasses an extraordinary collection of historical data to explain why the Industrial Revolution was born in western Europe, not Africa or India."--William Baldwin, Forbes "Clark's ferociously systematic expounding of an alternative to the institutional explanation does...provide many delightful insights, large and small, along the way. Some of the observations in this very well-written book do make for nice dinner party anecdotes."--Harold James, The American Interest "Comes now Gregory Clark, an economist who interestingly takes the side of culture. In an important new book, A Farewell to Alms Clark suggests that much of the world's remaining poverty is semi-permanent. Modern technology and management are widely available, but many societies can't take advantage because their values and social organization are antagonistic. Prescribing economically sensible policies (open markets, secure property rights, sound money) can't overcome this bedrock resistance."--Robert Samuelson, The Washington Post "A Farewell to Alms is a brave new work, rich in both detailed facts and big ideas. Clark clears away much of the tangled brush of theories of long-term economic growth that have grown up in recent decades. This is the most ambitious and far-reaching book on long-term economic history to appear in many years, perhaps since Jared Diamond's Guns, Germs, and Steel."--Jack A. Goldstone, World Economics "Clark's book A Farewell to Alms is ... Ambitious, staking out an entire vision of world history... Clark's Malthusian model is forcefully argued."--Roger Gathman, Austin American-Statesman "[T]he author's engaging style and (relatively) jargon-free descriptions of the economic principles in play before, during, and after the Industrial Revolution in England turn this rich and detailed account into more of a sprint than a slog... Whatever your reaction to this decidedly un-PC take on economic aid, [A Farewell to Alms] serves as a useful explanation of how we got where we are today and a reminder that new approaches are needed to close the yawning gap between the world's richest and poorest societies."--Roberta Fusaro, Harvard Business Review "Clark argues the English evolved biologically in ways that created prosperity. Before you dismiss the notion, read this brilliant tour of economic history."--MoneySense Magazine "Clark adds substantively to an understanding of perhaps the important questions of this--or any--era: what makes economies grow, and why have some not experienced any success at all?...Alms is provocative, authoritative, insightful, readable, well documented, and an inescapable detour for anyone wanting to tackle economic growth and development topics and enter into these conversations."--A. R. Sanderson, Choice "Gregory Clark has written a fascinating book which is chock-full of insight and ideas. Clark paints on a big canvas and his deft handling of the puzzles and counterintuitive outcomes is delicious. 'No one,' he says, 'can claim to be truly intellectually alive without having understood and wrestled, at least a little, with these mysteries'. We are indebted to him for revealing more of them in such an electrifying fashion."--Ian R. Harper, The Melbourne Review "[A Farewell to Alms] is one of the most fascinating, and the most disturbing, historical works I have read. It seems to suggest that the gross inequality of our world has less to do with the inherent unfairness of global capitalism and more with scarcely ineradicable cultural difference... [T]his is economic history as you never read it before."--A.N. Wilson, The Daily Telegraph "Why do some nations get rich while others stay poor? What are the conditions that allow an economy to take off and grow? These questions have puzzled economists for many years. But no explanation is more startling than the one proposed by Gregory Clark in his book A Farewell to Alms."--Ross Gittins, Sydney Morning Herald "This is a fine book, bristling with interesting data and opinions, more extensive than this review can possibly convey. Readily accessible to non-fiction readers, this book should fire more debate about a historical episode of unfailing fascination."--Michael G. Sargent, Interdisciplinary Science Reviews "This is ... a remarkable book, with an unerring focus on the fundamentals of the Malthusian economy and the large-scale economic trends. It is a unique source of factual information, beautifully presented in almost 200 tables and figures, and will make an excellent textbook for college-level courses of history and economics."--Gerhard Meisenberg, Journal of Biosocial Science "[P]erhaps there is no higher praise for an author than to say that I disagreed with the arguments but liked the book. It made me think in new ways about the course of economic history. I recommend the book to anyone with an interest in the economic history of the world."--Rick Szostak, New Global Studies "I derived enormous stimulation from this book. At a superficial level, Clark offers a richly documented picture of England's economic history, put into perspective by comparisons with other parts of Europe and with the Far East, and sometimes even by references to amazing facts about ancient forager societies... More fundamentally, the layman gets a good understanding here of what made for the Industrial Revolution and how its preconditions evolved in England over a period of centuries. Clark accuses economists of being undereducated about history. This will be somewhat remedied if they read his provocative book."--Wolfgang Kasper, Policy "As a self-proclaimed exercise in 'big history' this work succeeds extraordinarily well: it is engaging and readable, and it renders abstruse economic models and empirical results accessible to nonspecialists."--Zorina Khan, Technology and Culture "A Farewell to Alms is ... worth scrutinizing. The book offers a distinct line of thought on evolutionary affairs. It is also valuable in historiographical terms as it recalls historical explanation forsaken due to shifting scholarly fashions."--Ian Morley, The History Teacher "Gregory Clark has written a stimulating, provocative, witty, and ambitious book. It is accessible to the uninitiated and a pleasure to read. Clark's valuable insights are presented with an admirable forcefulness, as are his grievous errors. In short, this is a book very much worth reading for the sake of argument and debate."--Jan De Vries, Journal of Economic History "Clark has provided a sensible and readable account of important frontier research in economic history."--Peter Howitt, Journal of Interdisciplinary History "Gregory Clark has given us a very provocative work. It is economic history, but with strong implications for contemporary problems. His quantitative techniques for demonstrating such phenomena as the innumeracy of pre-industrial humanity and the evolution of the speed of information flows are clever."--Arnold Kling, Journal of BioeconomicsTable of ContentsPreface ix Acknowledgments xi Chapter 1: Introduction: The Sixteen-Page Economic History of the World 1 PART I: The Malthusian Trap: Economic Life to 1800 Chapter 2: The Logic of the Malthusian Economy 19 Chapter 3: Living Standards 40 Chapter 4: Fertility 71 Chapter 5: Life Expectancy 91 Chapter 6: Malthus and Darwin: Survival of the Richest 112 Chapter 7: Technological Advance 133 Chapter 8: Institutions and Growth 145 Chapter 9: The Emergence of Modern Man 166 PART II: The Industrial Revolution Chapter 10: Modern Growth: The Wealth of Nations 193 Chapter 11: The Puzzle of the Industrial Revolution 208 Chapter 12: The Industrial Revolution in England 230 Chapter 13: Why England? Why Not China, India, or Japan? 259 Chapter 14: Social Consequences 272 PART III: The Great Divergence Chapter 15: World Growth since 1800 303 Chapter 16: The Proximate Sources of Divergence 328 Chapter 17: Why Isn't the Whole World Developed? 352 Chapter 18: Conclusion: Strange New World 371 Technical Appendix 379 References 383 Index 409 Figure Credits 419

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Book SynopsisQuestions about the nature of money have gained a new urgency in the aftermath of the global financial crisis. Even as many people have less of it, there are more forms and systems of money, from local currencies and social lending to mobile money and Bitcoin. Yet our understanding of what money is--and what it might be--hasn't kept pace. In The SoTrade Review"An exhaustive analysis of money as a complex social process--not a thing--that will appeal to scholars in many fields."--Kirkus Reviews "Dodd presents a wide-ranging and sophisticated review and integration of the academic work related to alternative conceptions of modern money... [T]his is a richly rewarding book. Those of us accustomed to thinking of money as something we exchange for beer and pizza will never again have such a simple story."--Pietra Rivoli, Financial Times "Nigel Dodd's The Social Life of Money is fascinating."--Diane Coyle, Enlightened Economist "Exhaustively researched... Unexpected and fascinating."--BizEd "[T]his brilliant book helps reconsidering views, opinions and theoretical claims on money that might be taken for granted too easily. It is a must-read for any scholar interested in the topic as it helps to better understand the nature of money--or, of monies. Also, surely many future in-depth case studies of particular forms of money will gain enormously from this work."--Philipp Degens, LSE SociologyTable of ContentsACKNOWLEDGEMENTS IX INTRODUCTION 1 1 ORIGINS Barter 17 Tribute 23 Quantification 27 Mana 30 Language 34 Violence 43 Conclusion 46 2 CAPITAL The Contradictions of Money 51 Credit Money 55 Finance Capital 59 Primitive Accumulation 63 When Credit Fails 66 Behind the Veil 72 Seeing Double 79 Conclusion 87 3 DEBT Debt's Untold Story 94 Credit and Nothing but Credit 102 Neochartalism 106 Schumpeter's Banks 111 Minsky's Half-Century 117 Strange Money 121 Austerity Myths 126 Conclusion 132 4 GUILT Ubermensch and Eternal Return 136 Capitalism, Debt, and Religion 142 Filthy Lucre 149 Conclusion 158 5 WASTE Money, Excretion, and Heterogeneous Matter 166 Derrida's Ghosts 179 Cool Money, Living Money 189 Conclusion 204 6 TERRITORY Westfailure 216 Nomisma 222 Deterritorialization 226 Empire 237 Euroland 251 Conclusion 266 7 CULTURE Money and Cultural Alienation 273 Polanyi and the Problem of Embeddedness 278 Relational Monies 286 Scales of Value 294 A Quality Theory of Money 298 Repersonalizing Impersonal Money 305 Conclusion 310 8 UTOPIA Simmel's Perfect Money 316 Fromm's Humanistic Utopia 330 Giving Time for Time 342 Rotting Money 346 Proudhon's Bank 351 Vires in Numeris 362 Toward a Monetary Commons 372 Conclusion 381 CONCLUSION 385 BIBLIOGRAPHY 395 INDEX 421

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Book SynopsisA companion to Daron Acemoglu's textbook, "Introduction to Modern Economic Growth", this manual contains solutions to selected exercises located throughout Acemoglu's text, helping students to maximize and reinforce their understanding of the material.Table of ContentsIntroduction ix Chapter 2: The Solow Growth Model 1 Exercise 2.11 1 Exercise 2.14* 5 Exercise 2.17 7 Exercise 2.18* 10 Exercise 2.19* 11 Exercise 2.20 12 Exercise 2.23 14 Exercise 2.27 17 Chapter 3: The Solow Model and the Data 21 Exercise 3.1 21 Exercise 3.9 23 Chapter 4: Fundamental Determinants of Differences in Economic Performance 25 Exercise 4.3 25 Chapter 5: Foundations of Neoclassical Growth 27 Exercise 5.9 27 Exercise 5.11 29 Exercise 5.12 30 Exercise 5.14* 36 Chapter 6: Infinite-Horizon Optimization and Dynamic Programming 39 Exercise 6.2* 39 Exercise 6.8 39 Exercise 6.9 43 Chapter 7: An Introduction to the Theory of Optimal Control 45 Exercise 7.1 45 Exercise 7.10 47 Exercise 7.17* 47 Exercise 7.18 48 Exercise 7.21 50 Exercise 7.24* 51 Exercise 7.25 55 Exercise 7.28 56 Chapter 8: The Neoclassical Growth Model 63 Exercise 8.2 63 Exercise 8.11 64 Exercise 8.15 66 Exercise 8.19 68 Exercise 8.23 69 Exercise 8.27 73 Exercise 8.31 76 Exercise 8.33 81 Chapter 9: Growth with Overlapping Generations 87 Exercise 9.1 87 Exercise 9.6 88 Exercise 9.7 90 Exercise 9.15 93 Exercise 9.16 95 Exercise 9.17 100 Exercise 9.21 101 Exercise 9.24* 102 Exercise 9.32* 104 Chapter 10: Human Capital and Economic Growth 107 Exercise 10.2 107 Exercise 10.6 109 Exercise 10.7 113 Chapter 11: First-Generation Models of Endogenous Growth 119 Exercise 11.4 119 Exercise 11.14 125 Exercise 11.17 129 Exercise 11.18 130 Chapter 12: Modeling Technological Change 131 Exercise 12.2 131 Exercise 12.11 132 Exercise 12.13 134 Chapter 13: Expanding Variety Models 139 Exercise 13.1 139 Exercise 13.6 141 Exercise 13.7 142 Exercise 13.13* 144 Exercise 13.15 148 Exercise 13.19 150 Exercise 13.22 159 Chapter 14: Models of Schumpeterian Growth 163 Exercise 14.2 163 Exercise 14.7* 164 Exercise 14.13 167 Exercise 14.15 171 Exercise 14.18 179 Exercise 14.21* 182 Exercise 14.26 186 Chapter 15: Directed Technological Change 197 Exercise 15.6 197 Exercise 15.18 201 Exercise 15.19 212 Exercise 15.24* 216 Exercise 15.27 218 Chapter 16: Stochastic Dynamic Programming 223 Exercise 16.4* 223 Exercise 16.8 224 Exercise 16.10 224 Exercise 16.11* 225 Exercise 16.12 231 Exercise 16.14 233 Chapter 17: Stochastic Growth Models 237 Exercise 17.13 237 Exercise 17.18 240 Exercise 17.30 * 243 Chapter 18: Diffusion of Technology 249 Exercise 18.8 249 Exercise 18.13* 254 Exercise 18.16* 258 Exercise 18.21 260 Chapter 19: Trade and Growth 263 Exercise 19.2* 263 Exercise 19.3 266 Exercise 19.4* 268 Exercise 19.11* 270 Exercise 19.25* 273 Exercise 19.26 * 274 Exercise 19.27 * 279 Exercise 19.28 284 Exercise 19.29 285 Exercise 19.33 289 Chapter 20: Structural Change and Economic Growth 293 Exercise 20.3 293 Exercise 20.5 294 Exercise 20.6 296 Exercise 20.8 296 Exercise 20.9* 299 Exercise 20.17 299 Exercise 20.19* 305 Chapter 21: Structural Transformations and Market Failures in Development 309 Exercise 21.1 309 Exercise 21.6 311 Exercise 21.12 315 Chapter 22: Institutions, Political Economy and Growth 323 Exercise 22.2 323 Exercise 22.3 326 Exercise 22.8 328 Exercise 22.16 329 Exercise 22.17 335 Exercise 22.22* 338 Exercise 22.27 343 Chapter 23: Institutions, Political Economy and Growth 351 Exercise 23.12 351 References 361

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Book SynopsisIndividuals and families make key decisions that impact many aspects of financial stability and determine the future of the economy. These decisions involve balancing current sacrifice against future benefits. This book is about modeling this individual or family-based decision making using an optimizing dynamic programming model.Trade Review"Forward-Looking Decision Making provides interesting applications of the dynamic programming approach for analyzing individual decisions that balance current and future welfare. The subjects are timely and the book contains a good selection of topics, united by a common analytical theme."—John Ermisch, University of EssexTable of ContentsForeword vii Preface ix Chapter 1: Basic Analysis of Forward-Looking Decision Making 1 1.1 The Dynamic Program 1 1.2 Approximation 5 1.3 Stationary Case 6 1.4 Markov Representation 7 1.5 Distribution of the Stochastic Driving Force 9 Chapter 2: Research on Properties of Preferences 10 2.1 Research Based on Marshallian and Hicksian Labor Supply Functions 13 2.2 Risk Aversion 15 2.3 Intertemporal Substitution 17 2.4 Frisch Elasticity of Labor Supply 19 2.5 Consumption-Hours Complementarity 20 Chapter 3: Health 23 3.1 The Issues 23 3.2 Basic Facts 25 3.3 Basic Model 26 3.4 The Full Dynamic-Programming Model 31 3.5 The Health Production Function 35 3.6 Preference Parameters 36 3.7 Solving the Model 37 3.8 Concluding Remarks 38 Chapter 4: Insurance 42 4.1 The Model 43 4.2 Calibration 45 4.3 Results 46 Chapter 5: Employment 50 5.1 Insurance 52 5.2 Dynamic Labor-Market Equilibrium 53 5.3 The Employment Function 58 5.4 Econometric Model 59 5.5 Properties of the Data 64 5.6 Results 65 5.7 Concluding Remarks 69 Chapter 6: Idiosyncratic Risk 70 6.1 The Joint Distribution of Lifetime and Exit Value 73 6.2 Economic Payoffs to Entrepreneurs 74 6.3 Entrepreneurs in Aging Companies 82 6.4 Concluding Remarks 85 Chapter 7: Financial Stability with Government-Guaranteed Debt 87 7.1 Introduction 87 7.2 Options 92 7.3 Model 94 7.4 Calibration 100 7.5 Equilibrium 101 7.6 Roles of Key Parameters 113 7.7 Concluding Remarks 115 7.8 Appendix: Value Functions 116 References 119 Index 123

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Book SynopsisThe Rise of a Prairie Statesman is the first volume of a major biography of the 1972 Democratic presidential candidate who became America's most eloquent and prescient critic of the Vietnam War. In this masterful book, Thomas Knock traces George McGovern's life from his rustic boyhood in a South Dakota prairie town during the Depression to his riseTrade ReviewWinner of the 2017 PROSE Award in Biography & Autobiography, Association of American Publishers "The Rise of a Prairie Statesman is the remarkable story of the making of one of the lions of liberalism, yet a man who also won the Distinguished Flying Cross. This brilliantly told saga of how a soft-spoken man of the Midwest shook up the established political order and emerged as one of the most eloquent and thoughtful leaders of the twentieth century is a must-read for anyone interested in American politics in the postwar era."--Robert P. Watson, Journal of American History "An important reconsideration of a significant 20th-century politician."--Kirkus "[I]n every way, the book succeeds. This is political writing--and life-writing--of the first order."--Open Letters Monthly "This biography will stand as the standard bearer for all future biographies. It is detailed enough to get to know the person in-depth, and it is well written; unlike some biographies, this one flows smoothly, but keeps it academic for fellow researchers and students."--San Francisco Book Review "First rate... The book is worth owning."--Bob Mercer, Rapid City Journal "Ably and engagingly written, copiously documented."--Choice "Knock's highly informed, comprehensive, and sympathetic portrait of George McGovern up through his 1968 reelection to the Senate suggests that the second volume will amply prove his credentials as a statesman, explain his greatness, and make it apparent why he merits a two-volume biography."--Bartholomew Sparrow, Perspectives on Politics "I started [the book] believing George McGovern to be the greatest presidential nominee of my lifetime and I finished it considering him to be one of the most qualified people ever to seek the presidency. As much of an admirer as I was, previously I had not fully appreciated the greatness of the man. I eagerly await book two."--Tom Gallagher, Los Angeles Review of BooksTable of ContentsPrologue ix 1 Yours, for Fixing Up This World 1 2 A Boy Never Gets over His Boyhood 11 3 A Clasping of Hands Meant Everything 29 4 The Best B-24 Pilot in the World 48 5 I Would Have to Call Him a Progressive Agrarian 77 6 America Was Born in Revolution against the Established Order 101 7 The Confused and Fear-Ridden Temper of the Times 124 8 What a Loss to History! 146 9 Washington, DC 176 10 The Apostle of Agriculture, Education, and Peace 203 11 The Quest for the Senate 231 12 Food for Peace 256 13 We Are Determining the Priorities of Our National Life 286 14 The Right Song for the Wrong Season 315 15 The Cup of Peril Is Full 347 16 But There Are Still People with Hope 379 17 The Kind of Man the Future Must Have 412 Epilogue: Come Home, America 425 Acknowledgments 431 A Note on Sources 435 Abbreviations 437 Notes 439 Index 501

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Book SynopsisDescribes the remarkable creative renaissance in economics, how economic thinking is being applied to the paradoxes of everyday life. This title incorporates the developments in the field, including the rise of behavioral finance, the failure of carbon trading, and the growing trend of government bailouts.Trade ReviewPraise for Princeton's previous editions: "Coyle's style is very accessible, and this book is an excellent survey of the frontiers of economics for the general reader... The Soulful Science can be recommended highly."--Paul Ormerod, Times Higher Education Supplement Praise for Princeton's previous editions: "The simple aim of The Soulful Science is to describe what economists do, how the field has changed in the past 10 years or so, and why you should care. It succeeds admirably."--Financial Times Praise for Princeton's previous editions: "This is an astonishing book: beautifully written."--Andrew Hilton, Financial World Praise for Princeton's previous editions: "Fluently written with the balance of a good novel, the result is a tour de force."--Donald Anderson, Business Economist Praise for Princeton's previous editions: "The Soulful Science is ... a grand whirlwind tour of modern economics, with fascinating vignettes of individual economists. It's a trip worth taking."--David Colander, American Scientist "Coyle is a talented writer and her book shows that good communication skills, to and with readers, assure wide appeal to almost the entire spectrum of economic thinkers."--Liviu Drugus, European LegacyTable of ContentsAcknowledgements vii Introduction 1 Prologue to Part1 9 Part 1. The Mysteries of Wealth and Poverty 11 Chapter One: The History Detectives 13 Chapter Two: What Makes Economies Grow? 39 Chapter Three: How to Make Poverty History 68 Prologue to Part 2 103 Part 2. Are Individuals Free to Choose? 105 Chapter Four: What's It All About? 107 Chapter Five: Economics for Humans 128 Chapter Six: Information and Markets 156 Prologue to Part 3 185 Part 3. Nature, Markets, and Society 187 Chapter Seven: Murderous Apes and Entrepreneurs 189 Chapter Eight: Economy versus Society 213 Chapter Nine: Why Economics Has Soul 242 References 273 Index 289

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Book SynopsisIs the patent system fundamentally broken, or can it be fixed with a few modest reforms? This book looks at the economic performance of patents. It asks whether patents work well as property rights, and, if not, what institutional and legal reforms are necessary to make the patent system more effective.Trade ReviewHonorable Mention for the 2008 PROSE Award in Law and Legal Studies, Association of American Publishers One of Choice's Outstanding Academic Titles for 2009 "James Bessen and Michael J. Meurer explode...illusions in their hard-hitting analysis of how patents perform economically. [T]his is an important book, for policymakers, lawyers, scholars and also for universities."--Fiona Reid, Times Higher Education "The U.S. patent system is not working. It stands accused on all sides of stifling innovation instead of nurturing it. [E]conomist James Bessen and law academic Michael Meurer show that the system no longer provides predictable property rights. They go on to offer solutions based on empirical evidence from history, law and economics."--Harold Wegner, Financial Times "Bessen and Meurer provide the first comprehensive review of the patent system in more than a generation, bringing together a survey of the available empirical data and a clear statement of the usefulness of and limits to the patents as property model."--Choice "[R]eaders of Patent Failure may not be sanguine about the likelihood that Congress or other policy-makers even care about, much less rely on, empirical data to inform their decision-making. But this book successfully demonstrates that they should. Ultimately, Patent Failure is a significant contribution to the growing literature on the problems and promise of the US patent system... Patent Failure rewards careful reading and is a book that cannot credibly be ignored by anyone seriously concerned about the fate of the US patent system."--William T. Gallagher, Law and Politics Book Review "[W]ell-written and well-documented book... [T]heir finding regarding the profitability of patents for patenting firms is the piece de resistance."--Julio H. Cole, Independent Review "In Patent Failure, Bessen and Meurer examine the U.S. patent system's current procedural and operational shortcomings. Considering the book's titular promise to reveal the dangers posed by judges, bureaucrats, and lawyers, readers might expect an angry broadside leveled at the entire legal profession. On the contrary, Patent Failure is measured and methodical, a provocative, evidence-based book for the lawyer and entrepreneur alike. The authors are nothing if not reasonable men."--Strategy + Business "[Patent Failure is] one of the most comprehensive empirical analyses of the patent system that has been performed in decades. Rather than piling up anecdotes of beleaguered innovators and rapacious patent trolls, Bessen and Meurer have done the hard work of collecting detailed data about the patent system. And the findings documented in Patent Failure are sobering."--Timothy B. Lee, ARS Technica "In keeping with its title, Patent Failure provides a critical assessment of the nation's patent system. The book inevitably leads the reader to ponder the value of patents as property and as gauges of economic growth."--Livinia N. Jones, Centre Daily Times "All in all, this book's advantage over other titles in the field is that it goes beyond models and theories providing a bright and well documented picture of the real world of the US patent system."--Andrea Filippetti, Research Policy "It's an excellent book and completely worth reading."--Mike Masnick, TechdirtTable of ContentsPreface ix Chapter 1: The Argument in Brief 1 Chapter 2: Why Property Rights Work, How Property Rights Fail 29 Chapter 3: If You Can't Tell the Boundaries, Then It Ain't Property 46 Chapter 4: Survey of Empirical Research: Do Patents Perform Like Property? 73 Chapter 5: What Are U.S. Patents Worth to Their Owners? 95 Chapter 6: The Cost of Disputes 120 Chapter 7: How Important Is the Failure of Patent Notice? 147 Chapter 8: Small Inventors 165 Chapter 9: Abstract Patents and Software 187 Chapter 10: Making Patents Work as Property 215 Chapter 11: Reforms to Improve Notice 235 Chapter 12: A Glance Forward 254 Notes 261 References 295 Index 315

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Book SynopsisIntends to give the reader an appreciation for how our economy works and the wondrous role that the price of everything plays in everyday life. This book presents a story about economic growth and the unseen forces that create and sustain economic harmony all around us.Trade Review"[A]n unusual and wildly enjoyable book."--Stephen J. Dubner, nytimes.com Freakonomics blog "Take a look at the computer screen your eyes are presently (hopefully) fixated on, not to mention the computer mouse you used in order to click on this posting. Did you ever consider how both were made? Could you make either yourself, and if so, how and where would you acquire the various raw materials and parts in order to create them? If the above questions vex you, the George Mason economics professor Russell Roberts's excellent new novel, The Price of Everything, is for you. Importantly, Roberts does not explain how things are made in this tale as much as he teaches us through a very interesting dialogue between a professor and student that the 'whole system we call a market economy works as well as it does precisely because of how little we have to know.'"--John Tamny, RealClearMarkets.com "Improbable as it might seem, perhaps the most important fact for a voter or politician to know is: No one can make a pencil. That truth is the essence of a novella that is, remarkably, both didactic and romantic. Even more remarkable, its author is an economist. If you read Russell Roberts's The Price of Everything: A Parable of Possibility and Prosperity you will see the world afresh."--George Will, Newsweek "This book is the third foray into the world of economic fiction for Roberts. In terms of prose and content, it is also his best effort... In this new book, set on and around the Stanford University campus, Roberts bundles several clever insights about everyday economics with the overriding theme of prosperity and economic growth, and pulls it all off with warmth and plenty of heart."--A.R. Sanderson, Choice "[T]he best attempt to teach economics through fiction that the world has seen to date."--Tyler Cowen, Marginal Revolution "The Price of Everything [is] Russ Roberts' latest didactic novel. I cannot recommend it strongly enough. I thought his other fictional attempts to teach economics were decent, but in my opinion this one represents a real step up."--Arnold Kling, EconLog "[The Price of Everything] is Roberts's third economics novel--the first two were Choice: A Fable of Free Trade and Protectionism and The Invisible Heart: An Economic Romance. They are great introductions to free-market economic theory, especially for those who are easily turned off by numbers and graphs. Wrapping a narrative around economic theories may seem like a peculiar approach to teaching, but didactic novels have a long and noble pedigree."--Clint Witchalls, Spectator "Don't be put off by the title, you just might not be able to put it down. Its brilliance is in its simplicity, and it's now the first economics book I recommend. Yes, Milton Friedman's Free to Choose and Friedrich Hayek's The Road to Serfdom are still the cornerstones, but easy to read? No."--Thomas Oliver, Atlanta Journal-Constitution "I loved the way Roberts wove into the story examples of what Hayek called spontaneous order that even those who believe that order happens only from the top down would have to acknowledge--from dancers moving unpredictably on the dance floor without ever colliding to the thousands of people and bits of specialized knowledge it takes to make a pencil, which nobody can make by himself. This little book deserves an audience as wide as eventually developed for 'Economics in One Lesson.' It conveys similar information in a more nuanced, personal and humanistic way. Nice work."--Alan W. Bock, Orange County Register "Have you ever wanted to give a friend a book that explains the main virtues of economic freedom in a dramatic way that is accessible to a broad audience? Russell Roberts's latest novel, The Price of Everything, is the book you want. That's right: I said 'latest novel.'"--David R. Henderson, Regulation "[T]he novel is eminently readable. And if you did not know anything about how the American system works you would come away from reading it better informed."--Bethan Marshall, The Business Economist "The Price of Everything is a must read for anybody interested in how market capitalism works."--Julie Novak, IPA ReviewTable of ContentsAuthor's Note xi Chapter 1: Thinking Outside the Box 1 Chapter 2: Out of Control 7 Chapter 3: Birds of a Feather 17 Chapter 4: Inconceivable 29 Chapter 5: Leaning on the Gardener 52 Chapter 6: Mea Culpa 64 Chapter 7: The Goose That Lays the Golden Eggs 77 Chapter 8: A Night in the Cemetery 104 Chapter 9: The Price of Everything 115 Chapter 10: No Host No Problem 129 Chapter 11: The Weaver of Dreams 150 Chapter 12: A Wild and Precious Life 166 Chapter 13: How's It Going to End? 174 Sources and Further Reading 191 Acknowledgments 201

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Book SynopsisIn the standard analysis of economic institutions - which include social conventions, the working rules of an economy, and entitlement regimes (property relations) - economists invoke the same theories they use when analyzing individual behavior. This book challenges these theories.Trade Review"At last, someone has written a hard-hitting demonstration that formulating the problems of economic policy in the 'old institutionalist' framework of analysis yields far greater insights than do attempts to frame these problems of achieving 'economic efficiency'. Daniel Bromley has written such a book: Sufficient Reason ... and it should be widely read by both the supporters and critics of environmental economics."--Bryan Norton, Environmental Values "In the absence of a consensus there is still the ongoing debate over the making of policy and judgments concerning welfare. To that debate, Bromley's book is a welcome and valuable addition."--Malcolm Rutherford, Journal of Economic MethodologyTable of ContentsAcknowledgments vii Preface ix PRELUDE 1 CHAPTER ON: Prospective Volition 3 CHAPTER TWO: The Task at Hand 20 PART ONE: On Economic Institutions 29 CHAPTER THREE: Understanding Institutions 31 CHAPTER FOUR: The Content of Institutions 43 CHAPTER FIVE: Institutional Change 67 PART TWO: Volitional Pragmatism 85 CHAPTER SIX: Fixing Belief 87 CHAPTER SEVEN: Explaining 103 CHAPTER EIGHT: Prescribing and Predicting 115 CHAPTER NINE: Volitional Pragmatism 129 PART THREE: Volitional Pragmatism at Work 153 CHAPTER TEN: Thinking as a Pragmatist 155 CHAPTER ELEVEN: Volitional Pragmatism and Explanation 166 CHAPTER TWELVE: Volitional Pragmatism and the Evolution of Institutions 180 CHAPTER THIRTEEN: Volitional Pragmatism and Economic Regulations 199 CHAPTER FOURTEEN: Sufficient Reason 212 Bibliography 225 Index 235

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Book SynopsisCan libertarians care about social justice? In this title, the author argues that they can and should. Unlike traditional libertarians, he argues that property rights are best defended not in terms of self-ownership or economic efficiency but as requirements of democratic legitimacy.Trade Review"[Free Market Fairness's] aim is to question opposed modes of thought and find a way between them. Saying that his book was written for 'ideologically uncommitted readers,' Mr. Tomasi invites them and others to join him in exploring the ideas he has outlined. It is an invitation well worth accepting, especially in an election year."--Adam Wolfson, Wall Street Journal "An extremely interesting and important project."--Ethics "[I]mportant"--Andrew KoppelmanNotre Dame Philosophical Reviews "In many respects, [Tomasi] is a classical liberal, but he also retains a strong commitment to the worst off in society. He is a supporter of both free-market capitalism and of safety nets. His goal is to combine economic liberty and social justice. In attempting to transcend the standard positions, he should be commended."--Daniel Ben-Ami, Spiked Review of Books "Tomasi is a useful corrective to both Rawls and Hayek."--Notre Dame Philosophical Reviews "Brilliant... The heart of Tomasi's book entails serious engagement with John Rawls and his liberal theory of justice as fairness."--Ryan T. Anderson, Weekly Standard "Tomasi takes a significant step beyond classical and some types of social democratic liberalism in an attempt to find common ground... Tomasi's 'market democracy' contributes important insight to the continuing political-economic debate."--Choice "One could hardly imagine John Tomasi's Free Market Fairness coming along at a more opportune time. Stump-speech rhetoric seems to have turned its attention (at least nominally) towards the concept of fairness... The proper role of government is up for debate again... Tomasi offers a clear-headed exploration of these and other issues during a moment of noticeable obtuseness and obfuscation in American politics [as] an accident of timing, incidental to his larger project, which is both ambitious and deeply needed."--Robert Herritt, Policy Review "Free Market Fairness is both an excellent book and an important one. What makes a work of philosophy valuable is not that it arrives at all the right conclusions, but that it asks the right questions, makes us think, and causes us to re-examine our assumptions. Free Market Fairness does all of those things. For this reason, it is appropriate to describe the book as seminal."--John Hasnas, Regulation "John Tomasi has written a spirited, accessible book that successfully argues the classical liberal tradition ... of private economic liberty as a necessary and equal partner with social and political liberties in a free and just democratic society. This integrated, constructive approach ... also recognizes the importance of social justice, a high liberal concept that he redefines by employing the principles of classical liberal thought... Tomasi has provided the intellectual and justificatory framework for classical liberal adherents to robustly explore opportunities in a market-democracy research program."--Thomas A. Hemphill, Journal of Markets and Morality "Free Market Fairness is a fine book that merits promotion, a merit raise, a cohort of graduate students, a fine reputation, and all the other benefits of academic life. The book is well written and well researched. The arguments are clearly stated and well defended. Political thinkers of all stripes will benefit from Tomasi's discussion of classical liberalism and libertarianism."--Mark A. Graber, Review of Politics "A landmark publication in political philosophy."--Res Publica "John Tomasi is to be applauded for endeavoring to restore among contemporary philosophy professors an appreciation of the political and moral virtues of classical economic liberalism, highlighting ... its benefits for all citizens, especially the 'less advantaged,' while distinguishing it from the dogmatic, apolitical libertarianism that tends in practice to weaken support for economic (and hence political) freedom."--David Lewis Schaefer, Society "Tomasi has done us all a service by starting, if not by ending, this important conversation."--John Thrasher, Public Choice "Tomasi presents a powerful vision of 'social justice, American style' ... [and] provides a refreshing framework for thinking about the ability of free markets and limited government to preserve the conditions in which justice can be realized, and it is particularly noteworthy for seeking to engage with egalitarian liberals on their own terms... Tomasi's primary goal is to challenge the existing paradigms for thinking about the relationship between markets and justice. At this task, he emphatically succeeds."--Keith Hankins, Journal of Moral Philosophy "[This book] will be greatly helpful to students of political philosophy and political economy, especially for those whose interests lie in economic inequality and economic Justin."--Sojin Shin, Political Studies ReviewTable of ContentsAcknowledgments ix Introduction xi Chapter 1: Classical Liberalism 1 Property and Equality 1 Market Society 6 America 11 Hayek 16 Classical Liberalism 22 Chapter 2: High Liberalism 27 Property or Equality 27 The Decline of Economic Liberty 32 Rawls 37 The Libertarian Moment 46 Liberalismus Sapiens Sapiens 51 Chapter 3: Thinking the Unthinkable 57 The Great Fact: Economic Growth 57 Populism, Probability, and Political Philosophy 60 Economic Liberty and Democratic Legitimacy 68 Endings, and Beginnings, Too 84 Chapter 4: Market Democracy 87 The Conceptual Space 87 Breaking Ice 99 Market Democracy as a Research Program 103 Institutions 106 The Challenges to Market Democracy 118 Chapter 5: Social Justicitis 123 The Distributional Adequacy Condition 123 Hit Parade: Property and the Poor 127 Hayek's Critique 142 Benadryl for Free-Marketeers 151 Chapter 6: Two Concepts of Fairness 162 Warming up to Market Democracy 162 Applying the Theory 172 The Argument Ipse Dixit 177 Justice as Fairness: Status or Agency? 180 Chapter 7: Feasibility, Normativity, and Institutional Guarantees 197 The Twilight of Left Liberalism? 197 Realistic Utopianism 203 Aims and Guarantees 215 Chapter 8: Free Market Fairness 226 The Difference Principle 226 Fair Equality of Opportunity 237 Political Liberty 247 Generational, Environmental, and International Justice 254 Free Market Fairness as a Moral Ideal 264 Conclusion 267 Notes 273 Bibliography 315 Index 333

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Book SynopsisThe ways financial analysts, traders, and other specialists use information and learn from each other are of fundamental importance to understanding how markets work and prices are set. This book analyzes how markets aggregate information and examines the impacts of market arrangements on the aggregation process and overall performance of markets.Trade Review"[R]eading Professor Vives's prose was a joy. His explanations for why various results obtain are clear and the flow from model to model is natural. Results in later chapters are frequently related to results in earlier chapters, tying the whole book together... [I]t is an excellent reference."--Lawrence R. Glosten, Journal of Economic Literature "Written in a simple and easy to understand language and providing an intuitive analysis of sophisticated models, this work can be a valuable reference for graduate courses in financial economics and microeconomics. Also, being thought-provoking, I find this book to be excellent reading material for researchers who work in both the asset pricing and market microstructure areas."--Leon Zolotoy, Economic RecordTable of ContentsPreface xi Introduction and Lecture Guide 1 References 12 Chapter 1: Aggregation of Information in Simple Market Mechanisms: Large Markets 15 1.1 Introduction and Overview 15 1.2 Large Cournot Markets 17 1.3 Welfare in Large Cournot Markets with Asymmetric Information 27 1.4 Information Aggregation in Smooth Large Markets 29 1.5 Auctions and Voting 38 1.6 Endogenous Information Acquisition 40 1.7 Summary 45 1.8 Appendix 46 1.9 Exercises 48 References 51 Chapter 2: Aggregation of Information in Simple Market Mechanisms: How Large Is Large? 53 2.1 A General Linear-Normal Cournot Model 54 2.2 Convergence to Price Taking in a Cournot Market 57 2.3 Endogenous Information Acquisition 58 2.4 Convergence to the First-Best: Market Power and Information Aggregation 62 2.5 Convergence in Auctions 67 2.6 Summary 70 2.7 Appendix 71 2.8 Exercises 74 References 76 Chapter 3: Rational Expectations and Supply Function Competition 78 3.1 Rational Expectations Equilibrium: Concepts, Problems, and Welfare 78 3.2 Supply Function Competition and REE in a Continuum Economy 84 3.3 Welfare Analysis of REE 95 3.4 Strategic Supply Function Equilibria and Convergence to a Price-Taking Equilibrium 98 3.5 Double Auctions 100 3.6 Summary 102 3.7 Appendix 102 3.8 Exercises 103 References 105 Chapter 4: Rational Expectations and Market Microstructure in Financial Markets 107 4.1 Market Microstructure 108 4.2 Competitive Rational Expectations Equilibria 112 4.3 Informed Traders Move First and Face Risk-Neutral Competitive Market Makers 130 4.4 Hedgers and Producers in a Futures Market 135 4.5 Summary 145 4.6 Appendix 147 4.7 Exercises 148 References 152 Chapter 5: Strategic Traders in Financial Markets 156 5.1 Competition in Demand Schedules 157 5.2 Informed Traders Move First 168 5.3 Market Makers Move First 177 5.4 An Application: Welfare Analysis of Insider Trading 183 5.5 Summary 189 5.6 Exercises 190 References 195 Chapter 6: Learning from Others and Herding 199 6.1 Herding, Informational Cascades, and Social Learning 200 6.2 Extensions of the Herding Model 204 6.3 A Smooth and Noisy Model of Learning from Others 210 6.4 Applications and Examples 222 6.5 The Information Externality and Welfare 227 6.6 Rational Expectations, Herding, and Information Externalities 236 6.7 Summary 239 6.8 Appendix 240 6.9 Exercises 241 References 244 Chapter 7: Dynamic Information Aggregation 248 7.1 Rational Expectations, Full-Information Equilibria, and Learning 248 7.2 Learning and Convergence to a Full-Information Equilibrium with Uninformed Firms 253 7.3 Market Dynamics with Asymmetric Information 257 7.4 Slow Learning and Convergence 261 7.5 Summary 266 7.6 Appendix 267 7.7 Exercises 271 References 273 Chapter 8: Dynamic Rational Expectations Models in Competitive Financial Markets 276 8.1 Dynamic Competitive Rational Expectations 277 8.2 The Impact of Risk-Averse Market Makers 285 8.3 Dynamic Trading with Short-Term Investors 294 8.4 Explaining Crises and Market Crashes 306 8.5 Summary 318 8.6 Appendix 320 8.7 Exercises 324 References 326 Chapter 9: Price and Information Dynamics in Financial Markets 330 9.1 Sequential Trading, Dynamic Market-Order Markets, and the Speed of Learning from Past Prices 331 9.2 Strategic Trading with Long-Lived Information 339 9.3 Market Manipulation and Price Discovery 347 9.4 Strategic Trading with Short-Lived Information 355 9.5 Strategic Hedging 358 9.6 Summary 360 9.7 Appendix 361 9.8 Exercises 362 References 365 Chapter 10: Technical Appendix 369 10.1 Information Structures and Bayesian Inference 369 10.2 Normal Distributions and Affine Information Structure 375 10.3 Convergence Concepts and Results 383 10.4 Games and Bayesian Equilibrium 390 References 398 Index 401

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Book SynopsisThe concept of general equilibrium, one of the central components of economic theory, explains the behavior of supply, demand, and prices by showing that supply and demand exist in balance through pricing mechanisms. This book explains how the equilibrium manifold approach can be usefully applied to the general equilibrium model.Trade Review"The economic concepts and differential topology methods presented in this book are clear, accessible and detailed so the reader can study the book independently without requiring any serious prior knowledge... [T]his comprehensive and pedagogical book is suitable for graduate students and also for researchers in this field."--Ioannis A. Polyrakis, Mathematical Reviews Clippings "General Equilibrium Theory of Value offers a comprehensive foundation for the most current models of economic theory and is ideally suited for graduate economics students, advanced undergraduates in mathematics, and researchers in the field."--World Book IndustryTable of ContentsPreface xi CHAPTER 1: Goods and Prices 1 1.1 Introduction 1 1.2 Goods 1 1.3 Prices 2 1.4 Relative Prices 2 1.5 Price Normalization 3 1.6 Notes and Comments 4 CHAPTER 2: Preferences and Utility 5 2.1 Consumption Sets 5 2.2 Binary Relations 6 2.3 Consumers' Preferences 8 2.4 Smooth Utility Functions 14 2.5 Conclusion 18 2.6 Notes and Comments 18 CHAPTER 3: Demand Functions 19 3.1 Introduction 19 3.2 Constrained Utility Maximization 19 3.3 The Individual Demand Function 23 3.4 Properties of Demand Functions in D 24 3.5 Demand-based Consumer Theory 31 3.6 Conclusion 36 3.7 Notes and Comments 36 CHAPTER 4: The Exchange Model 37 4.1 Introduction 37 4.2 The Sets E, Er, and Ec of m-tuples of Demand Functions Defining the Exchange Model 38 4.3 The Exchange Model 39 4.4 Equilibrium Equation 39 4.5 The Equilibrium Manifold and the Natural Projection 41 4.6 The Smooth Equilibrium Manifold 42 4.7 Smoothness of the Natural Projection 44 4.8 Critical and Regular Points and Values 44 4.9 Notes and Comments 46 CHAPTER 5: The Equilibrium Manifold 47 5.1 Introduction 47 5.2 Global Properties and Their Interest 47 5.3 The No-trade Equilibria 49 5.4 The Fibers of the Equilibrium Manifold 50 5.5 The Equilibrium Manifold as a Collection of Linear Fibers Parameterized by the No-trade Equilibria 52 5.6 A Picture of the Equilibrium Manifold 53 5.7 Diffeomorphism with R_m 53 5.8 Conclusion 54 5.9 Notes and Comments 55 CHAPTER 6: Applications of the Global Coordinate System 56 6.1 Introduction 56 6.2 Coordinate System (A) 56 6.3 Coordinate System (B) 57 6.4 Formulas of the Natural Projection 57 6.5 The Jacobian Matrix of Aggregate Excess Demand 58 6.6 Conclusion 61 6.7 Notes and Comments 61 CHAPTER 7: The Broad Picture 62 7.1 Introduction 62 7.2 Properness 62 7.3 Smooth Selection at a Regular Equilibrium 63 7.4 The Equilibrium Manifold over Regular Economies 64 7.5 Genericity of Regular Economies 67 7.6 The Degrees of the Natural Projection 69 7.7 Conclusion 72 7.8 Notes and Comments 73 CHAPTER 8: The Fine Picture 74 8.1 Introduction 74 8.2 Aggregate Demand at a No-trade Equilibrium 74 8.3 Regularity of the No-trade Equilibria 75 8.4 The Set of Equilibrium Allocations 75 8.5 Economies with a Unique Equilibrium 78 8.6 Degree of the Natural Projection 79 8.7 The Set of Regular Equilibria 79 8.8 Conclusion 81 8.9 Notes and Comments 81 CHAPTER 9: Production with Decreasing Returns 82 9.1 Introduction 82 9.2 Production Sets: Definitions 82 9.3 Production Sets: Main Properties 84 9.4 The Firm's Objective Function 89 9.5 The Strict Decreasing Returns to Scale Firm 90 9.6 The Net Supply Function as a Primitive Concept 92 9.7 Conclusion 94 9.8 Notes and Comments 95 CHAPTER 10: Equilibrium with Decreasing Returns 96 10.1 Introduction 96 10.2 The General Equilibrium Model with Private Ownership of Decreasing Returns to Scale Firms 96 10.3 Production Adjusted Demand Functions 98 10.4 The Equivalent Exchange Model 101 10.5 Properness of the Natural Projection 103 10.6 Conclusion 107 10.7 Notes and Comments 107 CHAPTER 11: Production with Constant Returns 108 11.1 Introduction 108 11.2 Production Sets 109 11.3 The Net Supply Correspondence 112 11.4 Three Examples 115 11.5 Net Supply Correspondence of a Smooth Constant Returns to Scale Firm 118 11.6 The Graph of the Net Supply Correspondence 120 11.7 Conclusion 123 11.8 Notes and Comments 123 CHAPTER 12: Equilibrium with Constant Returns 124 12.1 Introduction 124 12.2 Decreasing and Constant Returns: General Case 124 12.3 Constant Returns: Reduced Form 125 12.4 Equilibria of the Model N 126 12.5 The Equilibrium Manifold Approach 126 12.6 The Equilibrium Manifold for the Model N 127 12.7 The Natural Projection 133 12.8 Regular and Critical Equilibria 134 12.9 Degrees of the Natural Projection 137 12.10 Regular and Singular Economies 138 12.11 Uniqueness of Equilibrium over ?(T) 139 12.12 The Natural Projection as a Finite Covering of the Set of Regular Economies 141 12.13 Values of the Natural Projection Degrees 143 12.14 Conclusion 144 12.15 Notes and Comments 144 Postscript 145 APPENDIX A: Notation 149 A.1 Points, Vectors, Inner Product 149 A.2 Gradient 149 A.3 Second-Order Derivatives and the Hessian Matrix of a Smooth Function 150 APPENDIX B: Point-set Topology 151 B.1 Proper Maps 151 APPENDIX C: Smooth Manifolds 152 C.1 The Implicit Function Theorem 152 C.2 Smooth Manifolds and Submanifolds 152 C.3 Smooth Mappings, Immersions, and Submersions 153 APPENDIX D: Singularities of Smooth Maps 155 D.1 Critical and Regular Points 155 D.2 Singular and Regular Values 155 D.3 Sard's Theorem 156 D.4 The Regular Value Theorem 156 D.5 The Case where dimX = dimY 156 D.6 Coverings 157 D.7 Surjectivity of Maps with Non-Zero Modulo 2 Degree 157 APPENDIX E: Convexity 159 E.1 Convex and Strictly Convex Sets 159 E.2 Quasi-concave Functions 159 E.3 Smooth Quasi-concavity and Second-Order Derivatives 162 E.4 Bordered Hessian of a Smoothly Quasi-concave Function 164 E.5 Recession Cone of a Convex Set 165 APPENDIX F: Miscellany 166 F.1 Dimension of Semi-algebraic Sets 166 References 167 Index 171

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Book SynopsisFinancial disasters - and stories of the greedy bankers who precipitated them - seem to underscore the idea that self-interest will always trump concerns for the greater good. But is it valid? This title challenges the notion that doing well is accomplished only at the expense of doing good.Trade Review"This book is short, accessible and thought-provoking... Frank draws heavily from game theory and evolutionary biology to explain why do-gooders work for less and firms that don't squeeze suppliers and cheat customers profit over the long run."--Washington Post "Moral behavior is not irrational ... Frank insists. The challenge is to define self-interest in a manner capacious enough to accommodate the real motives for people's choices. Frank does this with a mixture of Darwinian science, psychology, and flexible common sense."--Laura Secor, Boston Globe "What Price the Moral High Ground? Is wide-ranging and well-written."--John J. DiIulio, Jr., The Weekly Standard "[Frank's] vision is one that allows people to strive to meet their chosen goals and promotes the common good in an ordered cosmos--which is exactly where many of us want to live."--Merrill Matthews, Business EconomicsTable of ContentsIntroduction: Infectious Good vii Part I. DOING WELL 1. Forging Commitments That Sustain Cooperation 3 2. Can Cooperators Find One Another? 28 3. Adaptive Rationality and the Moral Emotions 45 4. Can Socially Responsible Firms Survive in Competitive Environments? 58 Part II. DOING GOOD 5. What Price the Moral High Ground? 71 6. Local Status, Fairness, and Wage Compression Revisited 92 7. Motivation, Cognition, and Charitable Giving 109 Part III. FORGING BETTER OUTCOMES 8. Social Norms as Positional Arms-Control Agreements 133 9. Does Studying Economics Inhibit Cooperation? 155 Appendix: Ethics Questionnaire 179 Epilogue: The Importance of Sanctions 183 References 191 Index 199

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Book SynopsisThe recent economic crisis was a dramatic reminder that capitalism can both produce and destroy. It's a system that by its very nature encourages predators and creators, locusts and bees. But, as Geoff Mulgan argues in this compelling, imaginative, and important book, the economic crisis also presents a historic opportunity to choose a radically diTrade Review"[I]nteresting and thought-provoking."--Frank Dillon, Irish Times "Geoff Mulgan's The Locust and the Bee is an important contribution to this field."--John Lloyd, Financial Times "There is much in Mulgan's analysis that will repay careful scrutiny... The Locust and the Bee abounds with arresting observations of this kind and no one will finish the book without having learned something new and important."--John Gray, New Statesman "Mulgan is my former boss, but that doesn't stop me from saying that what he writes is always rewarding because he intellectually coaxes you into believing--however fleetingly--that a rotten system doesn't have to be this way."--Yvonne Roberts, Observer "[E]xcellent."--Frank Pasquale, Concurring OpinionsTable of ContentsChapter 1- After Capitalism 1 Chapter 2 - Barren and Pregnant Crises 17 Chapter 3 - The Essence of Capitalism 28 Chapter 4 - To Take or to Make 52 *The Roles of Creators and Predators Chapter 5 - Capitalism's Critics 79 Chapter 6 - Anticapitalist Utopias and Neotopias 104 Chapter 7 - The Nature of Change 116 *How One System Becomes Another Chapter 8- Creative and Predatory Technology 145 Chapter 9 - The Rise of Economies Based on Relationships and Maintenance 172 Chapter 10 - Capitalism's Generative Ideas 198 Chapter 11 - New Accommodations 230 *or How Societies (Occasionally) Jump Chapter 12 - Outgrowing Capitalism 280 Notes 289 Acknowledgments 321 Index 323

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Book SynopsisDeveloping a new idea requires money, which poses a problem of trust. This title proposes a legal theory of economic growth that details how property, contract, and business laws help to unite capital and ideas. It demonstrates why ineffective private and business laws are the root cause of the poverty of nations in today's world.Trade Review"Cooter and Schafer apply insights from the field of law and economics to the problem of poverty. They describe how institutions like contracts overcome dilemmas of trust at the heart of economic transactions. Readers interested in understanding the law and economics approach would do well to start with this well-written volume, which develops a model of the legal institutions needed for innovation... [A] significant contribution to the field."--Choice "[C]ompelling."--Michael Strong, Barron's "Rich in institutional detail, wisdom and practical advice."--Alex Tabarrok, Marginal Revolution "The authors, Cooter and Schafer, skilfully avoid economics verbiage and complicated legal terms, providing instead a plethora of anecdotes, appropriate examples and studies."--Lisa Kaaki, Arab News "Solomon's Knot remains an entertaining and comprehensive read. It successfully conveys the main theories of law and economics within the context of promoting innovation as a source of sustained growth. Moreover, it proposes clear and simple policy recommendations for developing countries to adopt in pursuit of greater wealth creation and economic development."--Christel Y. Tham, Journal of International Law and PoliticsTable of ContentsPreface ix Acknowledgments xiii Chapter 1: It's about the Economy 1 Chapter 2: The Economic Future of the World 13 Chapter 3: The Double Trust Dilemma of Development 27 Chapter 4: Make or Take 39 Chapter 5: The Property Principle for Innovation 50 Chapter 6: Keeping What You Make--Property Law 64 Chapter 7: Doing What You Say--Contracts 82 Chapter 8: Giving Credit to Credit--Finance and Banking 101 Chapter 9: Financing Secrets--Corporations 123 Chapter 10: Hold or Fold--Financial Distress 142 Chapter 11: Termites in the Foundation--Corruption 159 Chapter 12:Poverty Is Dangerous--Accidents and Liability 179 Chapter 13: Academic Scribblers and Defunct Economists 193 Chapter 14: How the Many Overcome the Few 211 Chapter 15: Legalize Freedom--Conclusion 223 Notes 229 Bibliography 299 Index 313

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Book SynopsisEven in the wake of the biggest financial crash of the postwar era, the United States continues to rely on Securities and Exchange Commission oversight and the Sarbanes-Oxley Act. This book argues that less government regulation - not more - is what's needed to ensure that managers of public companies keep their promises to investors.Trade Review"Macey is a scholar who has mastered the latest and best scholarship in law, economics, finance, sociology, public choice theory, management and organization science, accounting and history. He prescribes a rational policy toward large corporations in a very readable and insightful work."--Henry G. Manne, Forbes.com "Against a backdrop of the most pervasive corporate failures since the Great Depression, Macey's book is must-reading for those who want to understand how we got into this mess... It should be hoped that his well-documented criticisms of those corporate governance mechanisms that investors most heavily rely upon will be heeded."--C. Evan Stewart, New York Law Journal "A must read for governance scholars and policy makers."--S. Grove, Choice "Macey's discussion of a wide range of interrelated issues is marvelously clear and provocative."--Christopher C. Faille, Federal Lawyer "Given the governance failures in our post-Enron environment, now is a particularly good time to read this book... I wish I'd written this book, although I could never have done it with the same flair and wisdom that Macey has done."--Nancy B. Rapoport, Business Law Today "Corporate Governance is a strong step forward."--Gabriel D. Rosenberg, Yale Law and Policy Review "Macey makes a strong case for his judgment about most of these institutions and practices, and events since his book was completed reinforce his judgments."--William A. Niskanen, Regulation "Corporate Governance: Promises Kept, Promises Broken provides a cogent analysis of the various institutions and systems that are supposed to promote effective corporate governance. Meanwhile, Macey's provocative theories and opinions present interesting fodder for all students of corporate organization. The book would be a valuable addition to any academic law library. Indeed, though the work is academic in tone, law firms or public law libraries with strong corporate collections may also be interested in this text."--Sara R. Paul, Law Library Journal "Overall, the book is detailed, thorough, and easy to read and follow... Macey's thoughts are obviously well-considered and thoroughly researched, and this book should be considered a must-read for anyone interested in the governance of U.S. companies. The book, or excerpts from it, would make a great companion to a corporations course because of its disagreements with the status quo."--Michael Sirkin, Concurring OpinionsTable of ContentsPreface vii INTRODUCTION: Corporate Governance as Promise 1 CHAPTER 1: The Goals of Corporate Governance: The Dominant Role of Equity 18 CHAPTER 2: Corporate Law and Corporate Governance 28 CHAPTER 3: Institutions and Mechanisms of Corporate Governance: A Taxonomy 46 CHAPTER 4: Boards of Directors 51 CHAPTER 5: Case Studies on Boards of Directors in Corporate Governance 69 CHAPTER 6: Dissident Directors 90 CHAPTER 7: Formal External Institutions of Corporate Governance: The Role of the Securities and Exchange Commission, the Stock Exchanges, and the Credit-Rating Agencies 105 CHAPTER 8: The Market for Corporate Control 118 CHAPTER 9: Initial Public Offerings and Private Placements 127 CHAPTER 10: Governance by Litigation: Derivative Lawsuits 130 CHAPTER 11: Accounting, Accounting Rules, and the Accounting Industry 155 CHAPTER 12: Quirky Governance: Insider Trading, Short Selling, and Whistle-blowing 165 CHAPTER 13: Shareholder Voting 199 CHAPTER 14: The Role of Banks and Other Lenders in Corporate Governance 223 CHAPTER 15: Hedge Funds and Private Equity 241 CONCLUSION 274 Notes 279 Index 325

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Book SynopsisArgues that we must restore genuine decision-making to our financial planning. Presenting a financial model that uses probability, experimental psychology, and decision theory, this title challenges us to rethink the standard wisdom about risk management.Trade Review"[Plight of the Fortune Tellers] is timely... [I]t provides a relatively accessible guide to annoyingly influential statistical theories, and it makes you think."--Financial World "A fascinating read... Rebonato writes in an engaging prose that is free of mathematics, yet intellectually rigorous. He provides a top-level view of risk management, founded on real-world situations."--Philippe Jorion, Journal of Economic Literature "[Plight of the Fortune Tellers] was written to appeal to a wide audience. Stylistically, Rebonato is an engaging writer who uses analogies and interesting examples...I'm confident you'll enjoy this book and that, after reading it, you will join in the dialog that Rebonato has started."--Garp Risk Review "In his new book, Plight of the Fortune Tellers, Rebonato shows... why Merrill Lynch and Citigroup shareholders are right to be concerned. Nowhere have I read a better account of how a conscientious, intellectually disciplined market risk manager approaches his work in today's complex world. Well known to Risk readers as a master of interest rate modeling, Rebonato has written an accessible, non-technical book."--Nicholas Dunbar, Risk "In Plight of the Fortune Tellers, Rebonato analyzes and offers solutions to problems related to quantitative risk management strategies and the value-at-risk (VAR) methodology currently used by financial managers. Through stories, examples, theory, and practical methods, he first provides a critical review of the current state of affairs in investment risk management. Then, he proposes how we should 'revisit our ideas about probability in financial risk management' and 'put decision making back at center stage.' In Plight of the Fortune Tellers contains valuable insights into the development of VAR methodology and problems associated with its use in the present financial management arena... In Plight of the Fortune Tellers is a book recommended for practitioners currently involved in quantitative methods and for students of investments and risk management at the graduate school level."--James Jackson, CFA Digest "This is an enjoyable, approachable book that may be read by anyone with an analytical mind. It is free of mathematics, yet it makes no concessions when it comes to explaining the complexities of a problem...I found a flowing prose that was a pleasure to read...[P]light of the Fortune Tellers is a great wake-up call for the industry. It deserves to be widely read since we all would like to be able to rely on the stability of the financial sector. It would be nice to get the risk management right."--Jessica James, Physics World "Remember that feeling of bewilderment after your first few weeks in your first job after university? That wrenching realization that, while the theories that you had laboured to understand may have been illuminating, they were too abstract to be applied to the real world? Reading Riccardo Rebonato's intriguing book brings those memories flooding back. For while Rebonato well understands, approves of, and writes about quantitative probability and risk theory, his day job involves actually managing financial risk. Hence he appreciates the limits both of theory and of applying it to real world situations... There is considerably more meat in this wise, practical, yet unpretentious book than can be summarized in a short review."--John Llewellyn, The Business Economist "Riccardo Rebonato is a better fortuneteller than the risk analysts he writes about. He has read the palms of the 'quants' who revel in developing ever more complex risk models and found that their 'real life' line is rather short. But apart from confirming the prejudices of a financial journalist with no statistical training, is this book worth reading? The answer is yes. It is timely; the subject--financial risk management--matters hugely; it provides a relatively accessible guide to annoyingly influential statistical theories; and it makes you think."--Financial World online "Plight of the Fortune Tellers is insightful and entertaining. It provides a non-technical yet sophisticated introduction to the perils of modern risk management and it has the potential to lead us in a better direction. Don't miss it."--Lisa R. Goldberg, Journal of Investment Management "This book should be on the reading list of experienced risk managers in the financial services industry as well as students who are contemplating a career in the field. It provides a thoughtful qualitative companion to more equation-laden texts on modern risk management."--Moshe A. Milevsky, Journal of Pension Economics and Finance "Plight of the Fortune Tellers is the best non-specialist introduction to quantitative financial risk management I have found."--Danny Reviews "This is an interesting book for managers or regulators whose responsibilities include oversight of finance."--Wan Lixin, Shanghai DailyTable of ContentsPreface to the Paperback Edition ix Preface xxxi Acknowledgments xlix Chapter 1: Why This Book Matters 1 Chapter 2: Thinking about Risk 22 Chapter 3: Thinking about Probabilities 40 Chapter 4: Making Choices 67 Chapter 5: What Is Risk Management For? 107 Chapter 6: VaR & Co: How It All Started 117 Chapter 7: Looking Beneath the Surface: Hidden Problems 139 Chapter 8: Which Type of Probability Matters in Risk Management? 182 Chapter 9: The Promise of Economic Capital 199 Chapter 10: What Can We Do Instead? 223 Endnotes 259 Index 267

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Book SynopsisDealer banks - that is, large banks that deal in securities and derivatives, such as J P Morgan and Goldman Sachs - are of a size and complexity that sharply distinguish them from typical commercial banks. This book examines how these banks collapse and how we can prevent the need to bail them out.Trade Review"[T]his volume will give readers a deeper understanding of how modern banking works."--Choice "There are precious few manuals on global finance. To be sure, there are enough leaden textbooks and scholarly tomes to crush many a library, but there are few nuts-and-bolts guides. Darrell Duffie has performed a great service by attempting to explain in simple terms why and how major investment banks (what he calls 'dealer banks') collapse... How Big Banks Fail is ... a valuable addition to public literature on the global financial crisis."--Joel Campbell, International Affairs "This is a clear and readable account of the mechanisms and incentives at play."--Saxon Brettell, Business Economist "I highly recommend the book. I believe the text should be standard reading for anybody involved with regulating and supervising financial institutions as it offers valuable insights into the plumbing of financial markets and the mechanisms that can cause bank failures. The discussed mechanisms are thought provoking and can provide researchers and regulators with valuable ideas for future research on the financial system as well as banking regulation."--Jan Wrampelmeyer, Financial Markets and Portfolio ManagementTable of ContentsList of Figures and Tables ix Preface xi Chapter One: Introduction 1 Chapter Two: What Is a Dealer Bank? 9 Chapter Three: Failure Mechanisms 23 Chapter Four: Recapitalizing a Weak Bank 43 Chapter Five: Improving Regulations and Market Infrastructure 53 Appendix: Central Clearing of Derivatives 63 Notes 71 Bibliography 79 Index 87

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Book SynopsisA dynamic framework for studying social emergenceThe social sciences have sophisticated models of choice and equilibrium but little understanding of the emergence of novelty. Where do new alternatives, new organizational forms, and new types of people come from? Combining biochemical insights about the origin of life with innovative and historically oriented social network analyses, John Padgett and Walter Powell develop a theory about the emergence of organizational, market, and biographical novelty from the coevolution of multiple social networks. They demonstrate that novelty arises from spillovers across intertwined networks in different domains. In the short run actors make relations, but in the long run relations make actors.This theory of novelty emerging from intersecting production and biographical flows is developed through formal deductive modeling and through a wide range of original historical case studies. Padgett and Powell build on the biochemiTrade Review"[Padgett and Powell] see the 'percolation of perturbations' through complex networks as the next research frontier in the program of study that they propose, and they hope their initial forays in The Emergence of Organizations and Markets will inspire readers across the sciences to pick up the torch. If that happens, this theoretically innovative contribution to social science will have catalyzed the regeneration of historical applications of complexity science."--Michael Macy, Science "This important book ... combines insights from biochemical origins of life and social network analysis to study the emergence of organizational forms that have been important in the development of market societies. This unusual synthesis provides original perspectives to the fourteen case studies in the book. These studies make sense of detailed relational data through models of biological evolution. In addition to being informative on some of the major turning points in economic history, the case studies suggest new explanations for the background and origins of major organizational innovations."--Ozge Dilaver Kalkan, JASSS "Combining biochemical insights about the origin of life with innovative and historically oriented social net-work analyses, John Padgett and Walter Powell develop a theory about the emergence of organizational market, and biographical novelty from the coevolution of multiple social networks."--World Book Industry "Padgett and Powell have put together an imposing positive theoretical and empirical account of organizational novelty that bears even the potential to inspire the natural sciences in return, irrespective of any remaining qualms on the part of less naturalistic social scientists."--Guido Mollering, Economic Sociology European Newsletter "The Emergence of Organizations and Markets will unquestionably change how scholars think about innovation and the economy, highlighting the importance of coevolution across multiple network domains and the duality between actors and social relations."--James N. Baron, American Journal of SociologyTable of ContentsContributors ix List of Illustrations xiii List of Tables xvii Acknowledgments xix Chapter 1 The Problem of Emergence John F. Padgett and Walter W. Powell 1 Part I Autocatalysis 31 * Chapter 2 Autocatalysis in Chemistry and the Origin of Life John F. Padgett 33 * Chapter 3 Economic Production as Chemistry II John F. Padgett, Peter McMahan, and Xing Zhong 70 * Chapter 4 From Chemical to Social Networks John F. Padgett 92 Part II Early Capitalism and State Formation 115 * Chapter 5 The Emergence of Corporate Merchant-Banks in Dugento Tuscany John F. Padgett 121 * Chapter 6 Transposition and Refunctionality: The Birth of Partnership Systems in Renaissance Florence John F. Padgett 168 * Chapter 7 Country as Global Market: Netherlands, Calvinism, and the Joint-Stock Company John F. Padgett 208 * Chapter 8 Conflict Displacement and Dual Inclusion in the Construction of Germany Jonathan Obert and John F. Padgett 235 Part III Communist Transitions 267 * Chapter 9 The Politics of Communist Economic Reform: Soviet Union and China John F. Padgett 271 * Chapter 10 Deviations from Design: The Emergence of New Financial Markets and Organizations in Yeltsin's Russia Andrew Spicer 316 * Chapter 11 The Emergence of the Russian Mobile Telecom Market: Local Technical Leadership and Global Investors in a Shadow of the State Valery Yakubovich and Stanislav Shekshnia 334 * Chapter 12 Social Sequence Analysis: Ownership Networks, Political Ties, and Foreign Investment in Hungary David Stark and Balazs Vedres 347 Part IV Contemporary Capitalism and Science 375 * Chapter 13 Chance, Necessite, et Naivete: Ingredients to Create a New Organizational Form Walter W. Powell and Kurt Sandholtz 379 * Chapter 14 Organizational and Institutional Genesis: The Emergence of High-Tech Clusters in the Life Sciences Walter W. Powell, Kelley Packalen, and Kjersten Whittington 434 * Chapter 15 An Open Elite: Arbiters, Catalysts, or Gatekeepers in the Dynamics of Industry Evolution? Walter W. Powell and Jason Owen-Smith 466 * Chapter 16 Academic Laboratories and the Reproduction of Proprietary Science: Modeling Organizational Rules through Autocatalytic Networks Jeannette A. Colyvas and Spiro Maroulis 496 * Chapter 17 Why the Valley Went First: Aggregation and Emergence in Regional Inventor Networks Lee Fleming, Lyra Colfer, Alexandra Marin, and Jonathan McPhie 520 * Chapter 18 Managing the Boundaries of an "Open" Project Fabrizio Ferraro and Siobhan O'Mahony 545 * Coda: Reflections on the Study of Multiple Networks Walter W. Powell and John F. Padgett 566 Index of Authors 571 Index of Subjects 573

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Book SynopsisVariations in the foreign exchange market influence various aspects of the world economy, and understanding these dynamics is one of the great challenges of international economics. This book provides a comprehensive examination of the standard theories and research in exchange-rate economics.Trade Review"This ambitious and impressive book covers the international macroeconomics and finance literature on nominal exchange-rate determination. It will be a useful reference for those who want to understand standard theoretical models and empirical techniques, and for those who want to specialize in the microstructure of the foreign exchange markets."—Pierre-Olivier Gourinchas, University of California, Berkeley"There is no other book of this kind. Sound and interesting, it provides a rigorous treatment of exchange-rate economics. The new concepts and interpretation of exchange-rate behavior will spur more research in this area. The book will interest a broad community in international finance, practitioners in the foreign exchange market, and policymakers."—Lucio Sarno, Cass Business School, City University LondonTable of ContentsPreface ix PART I: MACRO MODELS Chapter 1: Macro Models without Frictions 3 1.1 Preliminaries 4 1.2 Empirical Characteristics of Real Exchange Rates 8 1.3 Macro Exchange-Rate Models 21 1.4 Summary 50 1.5 Bibliography 51 1.6 Review Questions 52 1.A Appendix 54 Chapter 2: Macro Models with Frictions 63 2.1 The Model 63 2.2 Sticky Prices 72 2.3 International Risk-Sharing 96 2.4 Incomplete Markets 97 2.5 Summary 116 2.6 Bibliography 117 2.7 Review Questions 119 2.A Appendix 121 Chapter 3: Empirical Macro Models 130 3.1 Present Value Models 130 3.2 Monetary Models 147 3.3 External Balance Models 158 3.4 Predicting Exchange-Rate Movements 165 3.5 Summary 171 3.6 Bibliography 172 3.7 Review Questions 173 3.A Appendix 176 PART II: MICROSTRUCTURE MODELS Chapter 4: Rational Expectations Models 183 4.1 The Model 183 4.2 Equilibrium with Common Information 186 4.3 Equilibrium with Heterogeneous Information 196 4.4 Equilibrium Problems 213 4.5 Summary 216 4.6 Bibliography 217 4.7 Review Questions 217 4.A Appendix 220 Chapter 5: Sequential Trade Models 227 5.1 The Model 227 5.2 Exchange-Rate Determination 231 5.3 Exchange-Rate Dynamics 236 5.4 Information Flows 245 5.5 Public versus Private Information 253 5.6 Uninformed Traders 255 5.7 Summary 257 5.8 Bibliography 258 5.9 Review Questions 258 Chapter 6: Currency-Trading Models 261 6.1 The Structure of the FX Market 261 6.2 The Portfolio Shifts Model 271 6.3 Extending the Portfolio Shifts Model 289 6.4 Summary 295 6.5 Bibliography 295 6.6 Review Questions 296 6.A Appendix 297 Chapter 7: Currency-Trading Models: Empirical Evidence 302 7.1 Daily Analysis 302 7.2 Intraday Analysis 314 7.3 Summary 335 7.4 Bibliography 336 7.5 Review Questions 337 7.A Appendix 338 Chapter 8: Identifying Order Flow 342 8.1 Order Flow in a Rational Expectations Model 342 8.2 Order Flow in a Limit-Order Market 352 8.3 Estimating Order Flow 359 8.4 Summary 369 8.5 Bibliography 370 8.6 Review Questions 371 8.A Appendix 372 PART III MICRO-BASED MODELS Chapter 9: Order Flows and the Macroeconomy 377 9.1 A Micro-Based Macro Model 378 9.2 Empirical Implications 389 9.3 Re-Examining the Disconnect Puzzle 395 9.4 Summary 411 9.5 Bibliography 412 9.6 Review Questions 413 9.A Appendix 415 Chapter 10: Exchange Rates, Order Flows, and Macro Data Releases 422 10.1 The Macro Perspective 422 10.2 Micro Perspective I: High-Frequency Dynamics 429 10.3 Micro Perspective II: Low-Frequency Dynamics 446 10.4 Summary 458 10.5 Bibliography 459 10.6 Review Questions 459 10.A Appendix 462 Chapter 11: Exchange-Rate Risk 464 11.1 FX Returns and Interest Rates 464 11.2 Macro Models 474 11.3 Micro-Based Models 496 11.4 Summary 512 11.5 Bibliography 513 11.6 Review Questions 514 11.A Appendix 518 References 523 Index 535

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Book SynopsisLawyers, judges, and scholars have long debated whether incentives in tort, contract, and restitution law effectively promote the welfare of society. This book explains how law might better serve the social good.Trade Review"Getting Incentives Right does just as the book's title says, and does so in a way that will startle and educate novices as well as seasoned economists and lawyers, not to mention law professors and their students. The book guides readers to places where multiple parties and margins are accounted for, casting brilliant light on important legal problems."—Saul Levmore, University of Chicago Law School"Courts should get incentives right when developing rules in tort, contract, and restitution law. But even after decades of scholarship, commentators have only a vague idea as to what the right incentives are. Cooter and Porat put their powerful imaginations to work in a book full of surprising insights and compelling arguments about improving these areas of law. This lucid book will appeal to both the novice and expert."—Eric Posner, University of Chicago"This timely book presents Cooter and Porat's full perspective on the challenges that three important bodies of law—torts, contracts, and restitution—face in inducing optimal behavior. The result is a unique book that I have no doubt will become one of the leading texts in its field. Thought-provoking, original, and useful, it fills a void in the current legal literature."—Ehud Guttel, Hebrew University Law School"Cooter and Porat are the most innovative and inspirational law and economics scholars of our generation. More than anyone else, they are good at identifying ideas, problems, and solutions that cut across subject areas. This book brings them together to unveil common threads and exploit analytical synergies between different concepts. This is a work that every scholar in the field and every respectable academic library will want to own."—Francesco Parisi, University of Minnesota Law School and University of BolognaTable of ContentsAcknowledgments vii Introduction 1 I. Torts and Misalignments 13 1. Prices, Sanctions, and Discontinuities 17 2. The Injurer's Self-Risk Puzzle 32 3. Negligence Per Se and Unaccounted Risks 47 4. Lapses and Substitution 61 5. Total Liability for Excessive Harm 74 II. Contracts and Victims' Incentives 89 6. Unity in the Law of Torts and Contracts 92 7. Anti-Insurance 105 8. Decreasing Liability Contracts and the Assistant Interest 128 III. Restitution and Positive Externalities 149 9. A Public Goods Theory of Restitution 151 10. Liability Externalities and Mandatory Choices 165 11. The Relationship between Nonlegal Sanctions and Damages 187 Conclusion 207 Table of Cases 211 Table of Books and Articles 213 Subject Index 220

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Book SynopsisIn the century after "Adam Smith's Wealth of Nations", the British economy was transformed. This title considers how grand ideas about the connections between individual liberty, free markets, and social and economic justice sometimes attributed to Smith are as much the product of gradual modifications and changes wrought by later writers.Trade ReviewWinner of the 2011 David and Elaine Spitz Prize, International Conference for the Study of Political Thought "This is an important, sound analysis of the interrelation between political and economic theory in the century after Adam Smith... This book exemplifies the best contemporary work on the nexus of political and economic theory."--Choice "Milgate and Stimson produce a very careful and detailed analysis of early economists' ideas on issues shaping the modern concept of the political order, in the process displaying a rich array of competing ideas... [T]his book provides a striking perspective on classical political economy. The reader will benefit from some prior familiarity with Smith, Malthus, Ricardo and J. S. Mill, along with the Utilitarians."--Donald Frey, EH.net (Economic History Association) "In the last decade, scholars have moved away from the interpretation of Smith as a simple economic determinist who espoused lasissez-faire economics, and Milgate and Simpson have advanced their undertaking immensely with this book."--Donald Stabile, Australian Economic History Review "Milgate and Stimson have undertaken ... enormous scholarship in writing their book. Scholars and students of the history of economic ideas, as well as of the history of political economy and political thought in nineteenth-century Europe can benefit enormously from this book."--Farhad Rassekh, History of Economic IdeasTable of ContentsPreface vii CHAPTER ONE: Introduction 1 CHAPTER TWO: Adam Smith's Political Odyssey 10 CHAPTER THREE: The Rise and Fall of Civil Society 33 CHAPTER FOUR: Economic Life and Political Life 60 CHAPTER FIVE: The Economic Machine and the Invisible Hand 77 CHAPTER SIX: The Figure of Smith 97 CHAPTER SEVEN: Population and Political Economy 121 CHAPTER EIGHT: Utility, Property, and Political Participation 139 CHAPTER NINE: Economic Opinion on Parliamentary Reform 160 CHAPTER TEN: Utopias and Stationary States 186 CHAPTER ELEVEN: Labour Defended 217 CHAPTER TWELVE: Individual Liberty and the Liberty of Trade 237 CHAPTER THIRTEEN: Two Critiques of Classical Political Economy 258 References 269 Index 299

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Book SynopsisThe author was one of the few economists who warned of the global financial crisis before it hit. In this book, he argues that serious flaws in the economy are also to blame, and warns that a potentially more devastating crisis awaits us if they aren't fixed. It outlines the hard choices we need to make to ensure a more stable world economy.Trade Review* Raghuram G. Rajan, Winner of the 2013 Deutsche Bank Prize in Financial Economics, The Center for Financial Studies * Winner of the 2010 Business Book of the Year Award, Financial Times and Goldman Sachs * Winner of the 2011 Gold Medal in Finance/Investment/Economics, Independent Publisher Book Awards * Winner of the 2010 PROSE Award in Economics, American Publishers Awards* Winner of the 2010 Gold Medal Book of the Year Award in Business & Economics, ForeWord Reviews * Finalist for the 2010 Paul A. Samuelson Award, TIAA-CREF * Finalist for the 2010 Book of the Year Award in Business and Economics, ForeWord Reviews * One of strategy+business magazine's Best Business Books of the Year for 2010 * Best Crisis Book by an Economist and Named one of Bloomberg News's Thirty Business Books of the Year for 2010 * Finalist for the 2011 Estoril Global Issues Distinguished Book Prize* One of Financial Times's Books of the Year in Business & Economics, Nonfiction Round-Up for 2010 "Fault Lines is a must-read."--Nouriel Roubini, Forbes.com "[E]xcellent... [Fault Lines] deserve[s] to be widely read in a time when the tendency to blame everything on catch-all terms like 'globalisation' is gaining ground."--Economist "Like geological fault lines, the fissures in the world economic system are more hidden and widespread than many realize, he says. And they are potentially more destructive than other, more obvious culprits, like greedy bankers, sleepy regulators and irresponsible borrowers. Mr. Rajan ... argues that the actions of these players (and others) unfolded on a larger world stage, that was (and is) subject to the imperatives of political economies... [A] serious and thoughtful book."--New York Times "A thought-provoking new book... [Rajan's] voice is worth listening to."--Martin Wolf, Financial Times "The book, published by Princeton University Press, saw off stiff competition from five others on the shortlist, to be chosen as 'the most compelling and enjoyable' business title of 2010. The final intense debate among the seven judges came down to a choice between Fault Lines and Too Big to Fail, Andrew Ross Sorkin's acclaimed minute-by-minute analysis of the collapse of Lehman Brothers. The book identifies the flaws that helped cripple the world financial system, prescribes potential remedies, but also warns that unless policymakers push through painful reforms, the world could be plunged into renewed turmoil."--Financial Times "Rajan is worth reading not just because he was correct when few were but also because his writing is clear as a bell, even to nonspecialists."--Christopher Caldwell, Weekly Standard "The left has figured out who to blame for the financial crisis: Greedy Wall Street bankers, especially at Goldman Sachs. The right has figured it out, too: It was government's fault, especially Fannie Mae and Freddie Mac. Raghuram Rajan of the University of Chicago's Booth School of Business says it's more complicated: Fault lines along the tectonic plates of the global economy pushed big government and big finance to a financial earthquake. To him, this was a Greek tragedy in which traders and bankers, congressmen and subprime borrowers all played their parts until the drama reached the inevitably painful end. (Mr. Rajan plays Cassandra, of course.) But just when you're about to cast him as a University of Chicago free-market stereotype, he surprises by identifying the widening gap between rich and poor as a big cause of the calamity."--David Wessel, Wall Street Journal "In a new book ... entitled Fault Lines, Rajan argues that the initial causes of the breakdown were stagnant wages and rising inequality. With the purchasing power of many middle-class households lagging behind the cost of living, there was an urgent demand for credit. The financial industry, with encouragement from the government, responded by supplying home-equity loans, subprime mortgages, and auto loans... The side effects of unrestrained credit growth turned out to be devastating--a possibility most economists had failed to consider."--John Cassidy, New Yorker "[C]onvincing."--Christopher Caldwell, New York Times Magazine "What if the financial crash of 2008 was really caused by income inequality? Not greedy bankers, not reckless homeowners, but the ever widening-gulf between the rich and the poor? And what if the lack of social services--like health care--made things much, much worse? This is the startling new theory from Raghuram Rajan... [Fault Lines is] especially fascinating because it mixes free-market Chicago School economics with good-government ideas straight out of Obamaland."--John Richardson, Esquire.com "A high-powered yet accessible analysis of the financial crisis and its aftermath, Fault Lines was awarded the FT/Goldman Sachs Business Book of the Year. Rajan ... was one of the few who warned that the crisis was coming and his book fizzes with striking and thought-provoking ideas."--Financial Times (FT Critics Pick 2010) "What caused the crisis? ... There is an embarrassment of causes--especially embarrassing when you recall how few people saw where they might lead. Raghuram Rajan ... was one of the few to sound an alarm before 2007. That gives his novel and sometimes surprising thesis added authority. He argues in his excellent new book that the roots of the calamity go wider and deeper still."--Clive Crook, Financial Times "Few people were able to foresee the recent economic downturn. Raghuram Rajan ... was one of them. This makes his new book, Fault Lines, worthy of consideration amidst the rampant speculation about the causes of the financial crisis... Fault Lines is valuable primarily for its clear explanation of unintended economic consequences from well-meaning government intervention."--Washington Times "Rajan's writing is clear and direct."--James Pressley, Bloomberg News "Former IMF chief economist Raghuram G. Rajan ... in his new book, Fault Lines, brings together and explains the diverse failings that contributed to the crisis--the fault lines, as he puts it, that were exposed by the events of the past several years. Rajan then puts forward broad policy recommendations to ward off a future problem... Rajan's book takes a comprehensive look at what got us into the crisis and offers an intriguing approach to avoiding another one."--Phillip Swagel, Finance & Development "I devoured Raghuram Rajan's Fault Lines: How Hidden Fractures Still Threaten the World Economy in a very short span of time last night. It's brief, well-written, and extremely interesting. I would definitely recommend adding it to your financial crisis reading list."--Matthew Yglesias, Yglesias blog "The proposed global reforms that [Rajan] lists in Fault Lines run the gamut from the prosaic to grandiose. Along with revamping Wall Street's pay system, he offers innovative ideas on building capital buffers into the global credit system, obviating much of the need for bailouts of companies deemed too big or too enmeshed in the financial system to fail."--Barron's "Economists who can challenge their peers while remaining accessible to the general reader are rare, but Rajan belongs to this elite group. No short summary can do justice to this well-written, insightful, and nuanced study."--Choice "In 2007, then-chief IMF economist Raghuram G. Rajan delivered a stark warning to the world's top bankers: financial markets were headed for doom. They laughed it off. In the wake of the collapse that followed, Rajan has written a new book, Fault Lines: How Hidden Fractures Still Threaten the World Economy, that warns the system is doomed to repeat its mistakes. Like many defenders of the market, Rajan urges us not to demonize the bankers. But it's this fiscal conservative's focus on inequality that makes him stand out from the pack. The growing wage gap, he argues, is a hidden driver of financial instability, putting constant pressure on politicians to enact short-term fixes."--Toronto Star "The critics are wrong: Raghuram Rajan's analysis of the global financial crisis remains highly relevant and deserves to be widely read... The breadth of Rajan's explanatory framework--which is presented cogently and concisely within 230 pages of text--marks this book apart from many others that tackle the same themes."--Mark Hannam, Prospect "Dozens of experts have explored the reasons behind the ongoing global economic turmoil, and Raghuram Rajan provides his own elegant and thoughtful analysis in Fault Lines."--BizEd "With Fault Lines, Rajan has made an original diagnosis of the credit crisis, one that goes much further than those of greedy bankers or wasteful mortgage giants such as Fannie Mae and Freddie Mac."--Christophe De Rijcke, De Tijd (translated from the Dutch by K.C.L.) "A book that should be the default choice of discerning finance professionals when they enter the store the next time."--D. Murali, Business Line "Rajan's Fault Lines is ... expansive and policy-focused and clearly destined to become a must-read on any list of books on the recent global crisis."--Jahangir Aziz, Business Standard "Insightful, educative and incredibly gripping, if you want just one book to understand the ongoing global financial crisis and the way forward, Fault Lines it is."--Gautam Chikermane, Hindustan Times "Best Crisis Book by an Economist (2010)."--James Pressley, Bloomberg News "Fault Lines has a strong claim to be the economics book that best caught the spirit of 2010. Raghuram Rajan's receipt of the Financial Times and Goldman Sachs annual business book award only confirmed his book's widespread popularity. It is not hard to see why so many people liked it. Fault Lines eschews hyperbole for a lucid and balanced account of the crisis."--Fund Strategy "Rajan ... comes up with original and important long-term remedies... Rajan's book is a bold enterprise in three ways: firstly it aims to explain the US financial crisis by looking at deep, decade-long fractures in economies and societies; secondly it suggests well-known but radical solutions that few dare put forward; and finally it supplies innovative answers to practical questions... [T]he book will please any reader looking for an inquiry into the deepest causes of the recession and a consistent account of government's errors of omission and commission."--Natacha Postel-Vinay, British Politics and Policy "In a well-written, well-organized study, he focuses on ten of the most important issues bedeviling a still shaky world economy. Neither too technical for laymen nor too glib for specialists, the book ought to be a significant contribution to policy-makers' discussions of where we go now."--Joel Campbell, International Affairs "Just when you thought you had heard it all and that there is not much more that we can learn from the recent financial crises, here comes a brand-new assessment from another angle... Written with clarity and persuasion."--Good Book Guide "[T]his book is a must read for analysts, academics, politicians, economists, and the like."--Emilia Garcia-Appendini, Financial Markets and Portfolio ManagementTable of ContentsAcknowledgments ix Introduction 1 Chapter One: Let Them Eat Credit 21 Chapter Two: Exporting to Grow 46 Chapter Three: Flighty Foreign Financing 68 Chapter Four: A Weak Safety Net 83 Chapter Five: From Bubble to Bubble 101 Chapter Six: When Money Is the Measure of All Worth 120 Chapter Seven: Betting the Bank 134 Chapter Eight: Reforming Finance 154 Chapter Nine: Improving Access to Opportunity in America 183 Chapter Ten: The Fable of the Bees Replayed 202 Epilogue 225 Afterword to the Paperback Edition 231 Notes 241 Index 257

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Book SynopsisProvides an overview and exploration of methodologies, models, and techniques used to analyze forces shaping national economies. This title presents a range of methods for characterizing and evaluating empirical implications, including calibration exercises, method-of-moment procedures, and likelihood-based procedures, both classical and Bayesian.Trade Review"Structural Macroeconometrics is the ideal textbook for graduate students seeking an introduction to macroeconomics and econometrics, and for advanced students pursuing applied research in macroeconomics. The book's historical perspective, along with its broad presentation of alternative methodologies, makes it an indispensable resource for academics and professionals."--World Book IndustryTable of ContentsPreface xiii Preface to the First Edition xv Part I Introduction Chapter 1: Background and Overview 3 1.1 Background 3 1.2 Overview 4 Chapter 2: Casting Models in Canonical Form 9 2.1 Notation 9 2.1.1 Log-Linear Model Representations 11 2.1.2 Nonlinear Model Representations 11 2.2 Linearization 12 2.2.1 Taylor Series Approximation 12 2.2.2 Log-Linear Approximations 14 2.2.3 Example Equations 15 Chapter 3: DSGE Models: Three Examples 18 3.1 Model I: A Real Business Cycle Model 20 3.1.1 Environment 20 3.1.2 The Nonlinear System 23 3.1.3 Log-Linearization 26 3.2 Model II: Monopolistic Competition and Monetary Policy 28 3.2.1 Environment 28 3.2.2 The Nonlinear System 33 3.2.3 Log-Linearization 34 3.3 Model III: Asset Pricing 38 3.3.1 Single-Asset Environment 38 3.3.2 Multi-Asset Environment 39 3.3.3 Alternative Preference Specifications 40 Part II Model Solution Techniques Chapter 4: Linear Solution Techniques 51 4.1 Homogeneous Systems 52 4.2 Example Models 54 4.2.1 The Optimal Consumption Model 54 4.2.2 Asset Pricing with Linear Utility 55 4.2.3 Ramsey's Optimal Growth Model 56 4.3 Blanchard and Kahn's Method 57 4.4 Sims' Method 61 4.5 Klein's Method 64 4.6 An Undetermined Coefficients Approach 66v Chpater 5: Nonlinear Solution Techniques 69 5.1 Projection Methods 71 5.1.1 Overview 71 5.1.2 Finite Element Methods 72 5.1.3 Orthogonal Polynomials 73 5.1.4 Implementation 74 5.1.5 Extension to the l-dimensional Case 78 5.1.6 Application to the Optimal Growth Model 79 5.2 Iteration Techniques: Value-Function and Policy-Function Iterations 87 5.2.1 Dynamic Programming 87 5.2.2 Value-Function Iterations 89 5.2.3 Policy-Function Iterations 94 5.3 Perturbation Techniques 95 5.3.1 Notation 95 5.3.2 Overview 97 5.3.3 Application to DSGE Models 99 5.3.4 Application to an Asset-Pricing Model 105 Part III Data Preparation and Representation Chapter 6: Removing Trends and Isolating Cycles 113 6.1 Removing Trends 115 6.2 Isolating Cycles 120 6.2.1 Mathematical Background 120 6.2.2 Cramer Representations 124 6.2.3 Spectra 125 6.2.4 Using Filters to Isolate Cycles 126 6.2.5 The Hodrick-Prescott Filter 128 6.2.6 Seasonal Adjustment 130 6.2.7 Band Pass Filters 131 6.3 Spuriousness 134 Chapter 7: Summarizing Time Series Behavior When All Variables Are Observable 138 7.1 Two Useful Reduced-Form Models 139 7.1.1 The ARMA Model 139 7.1.2 Allowing for Heteroskedastic Innovations 145 7.1.3 The VAR Model 147 7.2 Summary Statistics 149 7.2.1 Determining Lag Lengths 157 7.2.2 Characterizing the Precision of Measurements 159 7.3 Obtaining Theoretical Predictions of Summary Statistics 162 Chapter 8: State-Space Representations 166 8.1 Introduction 166 8.1.1 ARMA Models 167 8.2 DSGE Models as State-Space Representations 169 8.3 Overview of Likelihood Evaluation and Filtering 171 8.4 The Kalman Filter 173 8.4.1 Background 173 8.4.2 The Sequential Algorithm 175 8.4.3 Smoothing 178 8.4.4 Serially Correlated Measurement Errors 181 8.5 Examples of Reduced-Form State-Space Representations 182 8.5.1 Time-Varying Parameters 182 8.5.2 Stochastic Volatility 185 8.5.3 Regime Switching 186 8.5.4 Dynamic Factor Models 187 Part IV Monte Carlo Methods Chapter 9: Monte Carlo Integration: The Basics 193 9.1 Motivation and Overview 193 9.2 Direct Monte Carlo Integration 196 9.2.1 Model Simulation 198 9.2.2 Posterior Inference via Direct Monte Carlo Integration 201 9.3 Importance Sampling 202 9.3.1 Achieving Efficiency: A First Pass 206 9.4 Efficient Importance Sampling 211 9.5 Markov Chain Monte Carlo Integration 215 9.5.1 The Gibbs Sampler 216 9.5.2 Metropolis-Hastings Algorithms 218 Chapter 10: Likelihood Evaluation and Filtering in State-Space Representations Using Sequential Monte Carlo Methods 221 10.1 Background 221 10.2 Unadapted Filters 224 10.3 Conditionally Optimal Filters 228 10.4 Unconditional Optimality: The EIS Filter 233 10.4.1 Degenerate Transitions 235 10.4.2 Initializing the Importance Sampler 236 10.4.3 Example 239 10.5 Application to DSGE Models 241 10.5.1 Initializing the Importance Sampler 243 10.5.2 Initializing the Filtering Density 245 10.5.3 Application to the RBC Model 246 Part V Empirical Methods Chapter 11: Calibration 253 11.1 Historical Origins and Philosophy 253 11.2 Implementation 258 11.3 The Welfare Cost of Business Cycles 261 11.4 Productivity Shocks and Business Cycle Fluctuations 268 11.5 The Equity Premium Puzzle 273 11.6 Critiques and Extensions 276 11.6.1 Critiques 276 11.6.2 Extensions 279 Chapter 12: Matching Moments 285 12.1 Overview 285 12.2 Implementation 286 12.2.1 The Generalized Method of Moments 286 12.2.2 The Simulated Method of Moments 294 12.2.3 Indirect Inference 297 12.3 Implementation in DSGE Models 300 12.3.1 Analyzing Euler Equations 300 12.3.2 Analytical Calculations Based on Linearized Models 301 12.3.3 Simulations Involving Linearized Models 306 12.3.4 Simulations Involving Nonlinear Approximations 307 12.4 Empirical Application: Matching RBC Moments 308 Chapter 13: Maximum Likelihood 314 13.1 Overview 314 13.2 Introduction and Historical Background 316 13.3 A Primer on Optimization Algorithms 318 13.3.1 Simplex Methods 319 13.3.2 Derivative-Based Methods 328 13.4 Ill-Behaved Likelihood Surfaces: Problems and Solutions 330 13.4.1 Problems 330 13.4.2 Solutions 331 13.5 Model Diagnostics and Parameter Stability 334 13.6 Empirical Application: Identifying Sources of Business Cycle Fluctuations 337 Chapter 14: Bayesian Methods 351 14.1 Overview of Objectives 351 14.2 Preliminaries 352 14.3 Using Structural Models as Sources of Prior Information for Reduced-Form Analysis 355 14.4 Implementing Structural Models Directly 360 14.5 Model Comparison 361 14.6 Using an RBC Model as a Source of Prior Information for Forecasting 364 14.7 Estimating and Comparing Asset-Pricing Models 373 14.7.1 Estimates 380 14.7.2 Model Comparison 384 References 387 Index 401

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Book SynopsisPresents the author's lecture notes for the first part of his well-known graduate course in microeconomics. In this edition, the author retains the striking originality and deep simplicity that characterize his famously engaging style of teaching.Trade Review"Rubinstein's very original work could be considered, in a certain sense, the personification of the co-operative and open ghost professor appearing in the student's home or dorm room while the student is reading, waiting patiently and speaking only if asked... [V]ery thought-provoking."--Adam Torok, Acta OeconomicaTable of ContentsPreface vii Introduction ix Lecture 1. Preferences 1 Problem Set 1 10 Lecture 2. Utility 12 Problem Set 2 20 Lecture 3. Choice 23 Problem Set 3 41 Lecture 4. Consumer Preferences 45 Problem Set 4 58 Lecture 5. Demand: Consumer Choice 60 Problem Set 5 73 Lecture 6. Choice over Budget Sets and the Dual Consumer 75 Problem Set 6 82 Lecture 7. The Producer 85 Problem Set 7 92 Lecture 8. Expected Utility 94 Problem Set 8 104 Lecture 9. Risk Aversion 107 Problem Set 9 119 Lecture 10. Social Choice 121 Problem Set 10 128 Review Problems 131 References 147 Index 151

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