Results for “law literature”
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Joseph Grundfest responds on the SEC, Bebchuk, and academic freedom

by Tyler Cowen December 17, 2014 at 12:34 am in

I received this email:

A colleague forwarded your post this morning, and there is an easy reply to your concerns.

Nothing in our analysis implicates academic freedom in the least, and the paper addresses this point directly in the text at page 12:

“The Harvard Proposal’s incomplete and categorical analysis of the academic literature could be published in any academic journal without raising any risk of violating the federal securities laws. But when scholars avail themselves of SEC regulations to force issuers to place statements describing academic research in the corporation’s proxy materials, the scholars voluntarily subject themselves to standards of legal liability that do not apply in other venues. There is no “professor exemption” from the requirement that a proxy proposal not be materially false or misleading.”

Thus, the salient point is that the proposal appears in the proxy only because the Harvard SRP voluntarily decides to avail itself of an SEC rule that forces the company to put the statement on the company’s proxy. In order to benefit from this rule, the proponent has to agree to abide by SEC rules that prohibit proposals from making statements that suffer from material omissions. The Harvard SRP can write or say whatever it wants without any of the concerns raised in the paper, provided that those statements don’t appear in Rule 14a-8 proposals. But, once the statements are submitted as a Rule 14a-8 proposal, they have to abide by the same rules as any other 14a-8 proposal.

The article’s analysis therefore suggests no constraint on academic freedom. We academics can write and say what we want without any concern regarding any of these SEC rules, provided we are not submitting shareholder proposal. And, for what it’s worth, to the best of my knowledge, the Harvard SRP is the only university-run program that engages in Rule 14a-8 campaigns, and no research by any Harvard scholar is at all affected by our article’s analysis, other than the materials that appear within the four corners of the shareholder proposals voluntarily submitted by the SRP.

Indeed, as an academic who benefits from academic freedom, I too would be concerned about any suggestion that our analysis has any effect on academic freedom whatsoever. It doesn’t.

Hope that’s responsive to your concerns.

Here is the home page of Joseph A. Grundfest. Here is his Wikipedia page.

Thursday assorted links

by Tyler Cowen December 11, 2014 at 12:59 pm

1. Jeff VanderMeer has a very interesting and smart favorite fiction of 2014 list.

2. Does the Super Bowl require subsidized insurance?

3. There is no great sports stagnation (short video).

4. Economic divergence of China and Japan?

5. Cataloging various development successes and failures.

6. Is YouTube becoming the dominant media source?

7. 1972 Harvard Crimson profile of Judith Shklar, fascinating along multiple dimensions.

The 2014 Nobel Laureate in economics is Jean Tirole

by Tyler Cowen October 13, 2014 at 7:04 am in

A theory prize! A rigor prize! I would say it is about principal-agent theory and the increasing mathematization of formal propositions as a way of understanding economics. He has been a leading figure in formalizing propositions in many distinct areas of microeconomics, most of all industrial organization but also finance and financial regulation and behavioral economics and even some public choice too. He is a broader economist than many of his fans realize.

Tirole is a Frenchman, he teaches at Toulouse, and his key papers start in the 1980s. In industrial organization, you can think of him as extending the earlier work of Ronald Coase and Oliver Williamson with regard to opportunism and recontracting, but applying more sophisticated and more mathematical forms of game theory. Tirole also has been a central figure in procurement theory and optimal contracts when there is asymmetric information about costs. The idea of mechanism design runs throughout his papers in many different guises. Many of his papers show “it’s complicated,” rather than presenting easily summarizable, intuitive solutions which make for good blog posts. That is one reason why his ideas do not show up so often in blogs and the popular press, but they nonetheless have been extremely influential in the economics profession. He has shown a remarkable breadth and depth over the course of the last thirty or so years.

His possible pick had been heralded for some numbers of years now, this award should not be considered a surprise at all. You will note that the Swedes mention Jean-Jacques Laffont, who died a decade ago, and who co-authored many of the key papers in this area with Tirole. Such a mention is considered a nod in the direction of implying that Laffont, had he lived, would have shared in the prize.

Here is Tirole’s home page. Here is Tirole on Wikipedia. Here is a short biography. Here is Tirole on scholar.google.com. Here is the press release. Here is background from the Swedes. Here is the 54-page document on why he won, one of the best places to start. Here is the Twitter commentary.

One idea of Tirole’s I use frequently has to do with renegotiability. Let’s say a regulator and a monopolist agree to a scheme of regulation and provision, creating some surplus for both parties. As time passes, will each side of that bargain stick with the original agreement? A simple example here is the defense contractor. After a procurement contract is written, sometimes the supplier has the incentive to conduct a hold-up, to report that costs are higher than expected, and to ask for more money in return for timely fulfillment of the contract. Of course this is a contract breach, but if no other supplier can step in and do the job, it may be optimal for the government to give in to these demands to some degree. The question then is: how should the contract best be designed in advance, so as to prevent this problem from popping up later on? Or should the renegotiation simply be allowed? Anyone wishing to tackle these questions likely would start with the papers of Tirole on this topic. For one thing, these papers help explain why a second-best optimal contract may offer some rents to agents and appear to give the agent “too good a deal.”

Some of his key papers focus on asymmetric information about costs. Say a firm knows its costs and the regulator can only guess. Ideally the regulator would likely to make the firm price at marginal cost, but the firm will pretend marginal cost is higher than it really is. The regulator and the firm thus play a game. Tirole figured out with rigor which principles govern how this game works and what a second-best regulatory solution might look like. With Laffont, here is his key paper in that area. David Baron made contributions to this area as well. Again, there is a potential argument for an “agent rent,” to limit the incentive of the agent to lie too much about costs, for fear of losing that rent if the cooperative relationship breaks down.

Tirole, writing sometimes with Rey, wrote some important papers on vertical agreements and how they can be used to extend market power, for instance when can buying up parts of a supply chain help extend monopoly power? His paper with Oliver Hart figures out some of the conditions under which vertical acquisitions can help foreclose a market. With Rey, Tirole surveys the literature on vertical relations and foreclosure.

This early 1984 paper, with Drew Fudenberg, laid out the conditions when firms should overinvest in capacity to deter competitive entry, or when firms should instead look “lean and mean” for entry deterrence. The underlying analysis has shaped many a business school discussion.

I am a fan of this 1996 paper on how we can think of firms as credible ways of carrying reputations in a collective sense. For instance the existence of a firm called “Google” transmits real information about the qualities of the people you deal with when you are transacting with members of the Google firm. This was an important addition to the usual Coasean vision of thinking of a firm in terms of economizing transaction costs.

He has written some key papers on financial intermediation, collateral, and the agency problems associated with lending, here is one well-cited paper by him and Holmstrom. Here is a non-gated version (pdf). A key argument is that a decline in the value of the collateral in a lending relationship can lower efficiency and also output, and this can help explain some features of business cycles. This 1997 paper was well ahead of its time and it remains one of Tirole’s most widely cited works. Arguably it is relevant for recent financial crises.

He has a 1994 book with Mathias Dewatripont on the prudential regulation of banks and how to apply the proper incentives to make sure banks do not take too much risk at public expense. Obviously this also has since become a much more important topic. How many of you know his 1996 paper with Rochet on “Interbank Lending and Systemic Risk“? They show the contradictions which can plague a “too big to fail” policy and the attempts of central banks to maintain a “creative ambiguity” about what kinds of bailouts will occur, using rigorous game theory of course.

With Rochet, he has a well-known paper on platform competition, laying out the basics of how these “two-sided” markets work. Think of internet or payment portals which must get both sides of the market on board. What are the efficiency properties of such markets and what are the game-theoretic issues? In this setting, how do for-profits compare to non-profits? Competition to monopoly? Rochet and Tirole laid out some of the basics here, here is their survey piece on the field as a whole. Alex’s post above has much more on these points, and Joshua Gans covers this area too, here is Vox.

In public choice economics, he and Laffont have an important paper on when regulatory capture is actually likely to occur. I have yet to see the insights of this paper incorporated into the rest of the literature adequately. His paper on the internal organization of government considers the relative appropriateness of high- vs. low-powered incentives as applied to government employees, among other matters. His 1999 paper with Mathias Dewatripont, “Advocates,” shows in game-theoretic terms why something like the Anglo-American system of competing lawyers might make sense as the best way of discovering information and adjudicating the truth. This paper shows how career concerns affect bureaucratic incentives and what is the optimal degree of specialization within a government bureaucracy.

He has thought very deeply about the nature of liquidity and what is the optimal degree of liquidity in a securities market. There can be some side benefits to illiquidity, namely that it forces parties to stay committed to an economic relationship. This must be weighed against the more obvious benefits of liquidity, which include having better benchmarks for measuring managerial performance, namely stock price (see this paper with Holmstrom). This kind of analysis can be applied to the question of whether the shares of a firm should stay privately traded or be put on a public exchange. This 1998 paper, with Holmstrom, is a key forerunner of the current view that the global economy does not have enough in the way of safe assets.

Here is his paper on vertical structure and collusion in bureaucracies (pdf). Here is his very useful survey article, with Holmstrom, on the theory of the firm.

His textbook on Industrial Organization is a model of clarity and remains a landmark in the field, even though it came out almost thirty years ago.

He has written a book on telecommunications regulation (with Laffont) although I have never read that material.

In finance he wrote this key 1985 paper, deriving the conditions under which you can have an asset bubble in a market with rational expectations. The problem of course is that the price of the asset tends to keep rising, relative to the size of the economy as a whole, and eventually it becomes impossible to keep on buying the asset. This has to mean an eventual crash, unless the growth rate of the economy exceeds the general rate of return on assets. This paper helped us think through some issues which recently have resurfaced with the work of Thomas Piketty. His earlier 1982 paper on speculation is also relevant to this topic. Most economists think of Tirole as game theory, finance, and industrial organization, but his contributions to finance are significant as well.

Just to show his breadth, here is his paper with Roland Benabou on incentives and when they undermine the intrinsic desire to do a good job. For instance if you pay kids to get good grades, will that backfire and kill off their own reasons for wanting to do well? Alex covers that paper in more detail. This other paper with Benabou, “Self-Confidence and Personal Motivation,” is a great deal of fun. It analyzes the benefits of overconfidence, namely greater motivation, and shows how to weigh those benefits against the possible costs, namely making more mistakes. It shows Tirole dipping a foot into the waters of behavioral economics and again reflects his versatility in terms of fields. I like this sentence from the abstract: “On the supply side, we develop a model of self-deception through endogenous memory that reconciles the motivated and rational features of human cognition.” Again with Benabou, here is his paper on willpower and personal rules, very much in the vein of Thomas Schelling.

Here is Tirole on intellectual property and health in developing countries, with plenty on policy.

It’s an excellent and well-deserved pick. One point is that some other economists, such as Oliver Hart and Bengt Holmstrom, may be disappointed they were not joint picks, this would have been the time to give them the prize too, so it seems their chances have gone down.

Overall I think of Tirole as in the tradition of French theorists starting with Cournot in 1838 (!) and Jules Dupuit in the 1840s, economics coming from a perspective with lots of math and maybe even some engineering. I don’t know anything specific about his politics, but to my eye he reads very much like a French technocrat in terms of approach and orientation.

Jean Tirole is renowned as an excellent teacher and a very nice person.

Nick Beckstead’s conversation with Tyler Cowen

by Tyler Cowen April 23, 2014 at 2:44 am in

Philosophy

Nick is a philosopher at Oxford and he has worked with Larry Temkin and Nick Bostrom. He typed up his version of our conversation (pdf), it starts with this:

Purpose of the conversation: I contacted Tyler to learn about his perspectives on existential risk and other long-run issues for humanity, the long-run consequences of economic growth, and the effective altruism movement.

Here are a few excerpts:

Tyler is optimistic about growth in the coming decades, but he doesn’t think we’ll become uploads or survive for a million years. Some considerations in favor of his views were:

1. The Fermi paradox is some evidence that humans will not colonize the stars.
2. Almost all species go extinct.
3. Natural disasters—even a supervolcano—could destroy humanity.
4. Normally, it’s easier to destroy than to build. And, in the future, it will probably become increasingly possible for smaller groups to cause severe global damage (along the lines suggested by Martin Rees).

The most optimistic view that Tyler would entertain—though he doubts it—is that humans would survive at subsistence level for a very long time; that’s what we’ve had for most of human history.

And:

People doing philosophical work to try to reduce existential risk are largely wasting their time. Tyler doesn’t think it’s a serious effort, though it may be good publicity for something that will pay off later. A serious effort looks more like the parts of the US government that trained people to infiltrate the post-collapse Soviet Union and then locate and neutralize nuclear weapons. There was also a serious effort by the people who set up hotlines between leaders to be used to quickly communicate about nuclear attacks (e.g., to help quickly convince a leader in country A that a fishy object on their radar isn’t an incoming nuclear attack).This has been fixed in other countries (e.g. US and China), but it hasn’t been fixed in other cases (e.g. Israel and Iran). There is more that we could do in this area. In contrast, the philosophical side of this seems like ineffective posturing.

Tyler wouldn’t necessarily recommend that these people switch to other areas of focus because people[‘s] motivation and personal interests are major constraints on getting anywhere. For Tyler, his own interest in these issues is a form of consumption, though one he values highly.

And:

Tyler thinks about the future and philosophical issues from a historicist perspective. When considering the future of humanity, this makes him focus on war, conquest, plagues, and the environment, rather than future technology.

He acquired this perspective by reading a lot of history and spending a lot of time around people in poor countries, including in rural areas. Spending time with people in poor countries shaped Tyler’s views a lot. It made him see rational choice ethics as more contingent. People in rural areas care most about things like fights with local villages over watermelon patches. And that’s how we are, but we’re living in a fog about it.

And:

The truths of literature and what you might call “the Straussian truths of the great books”—what you get from Homer or Plato—are at least as important rational choice ethics. But the people who do rational choice ethics don’t think that. If the two perspectives aren’t integrated, it leads to absurdities—problems like fanaticism, the Repugnant Conclusion, and so on. Right now though, rational choice ethics is the best we have—the problems of, e.g., Kantian ethics seem much, much worse.

If rational choice ethics were integrated with the “Straussian truths of the great books,” would it lead to different decisions? Maybe not—maybe it would lead to the same decisions with a different attitude. We might come to see rational choice ethics as an imperfect construct, a flawed bubble of meaning that we created for ourselves, and shouldn’t expect to keep working in unusual circumstances.

I’m on a plane for much of today, so you are getting Nick’s version of me, for a while at least. You will find Nick’s other conversations here.

The Great American novel, Buell and MR redux

by Tyler Cowen February 19, 2014 at 10:56 am in

Here is Lawrence Buell on the hunt for the Great American Novel. Here is and my original 2006 post on that question, and its later follow up. My dark horse picks are here.

Robert J. Barro on aggregate demand

by Tyler Cowen January 21, 2014 at 12:09 pm in

Economics

There has been a recent kerfluffle over whether Robert Barro rejects the notion of aggregate demand, which he had written with quotation marks as “aggregate demand.” Scott Sumner surveys the back and forth.

I say use The Google to find out what Barro really thinks and indeed he has written a whole piece on the topic (jstor), namely “The Aggregate-Supply/Aggregate Demand Model,” from the mid 1990s, and here is the abstract:

In recent years, many macroeconomic textbooks at the principles and intermediate levels have adopted the aggregate-supply/aggregate-demand (AS-AD) frame- work [Baumol and Blinder, 1988, Ch. 11; Gordon, 1987, Ch. 6; Lipsey, Steiner, and Purvis, 1984, Ch. 30; Mankiw, 1992, Ch. 11]. The objective was to allow for supply shocks in a Keynesian framework and to generate more satisfactory predictions about the behavior of the price level. The main point of this paper is that the AS-AD model is unsatisfactory and should be abandoned as a teaching tool.

In one version of the aggregate-supply curve, the components of the AS-AD model as usually used are contradictory. An interpretation of the model to eliminate the logical inconsistencies makes it a special case of rational-expectations macro models. In this mode, the model has no Keynesian characteristics and delivers the policy prescriptions that are familiar from the rational-expectations literature.

An alternative version of the aggregate-supply curve leads to what used to be called the complete Keynesian model: the goods market clears but the labor market has chronic excess supply. This model was rejected long ago for good reasons and should not be resurrected now.

If you read the paper, you will see three things. First, Barro is fully aware of “AD-like” phenomena and does not reject that notion. Second, Barro seems to prefer the IS-LM model to AS-AD, albeit with some caveats about possible false predictions of IS-LM and also noting in footnote two that he prefers his own presentation in his 1993 text. Third, Barro’s criticism is (whether you agree or not) that AD-AS collapses too readily into standard rational expectations models and doesn’t really provide an independent foundation for sticky price macroeconomics. In a nutshell “The AS-AD model is logically flawed as usually presented because its assumption that the price level clears the goods market is inconsistent with the Keynesian underpinnings for the aggregate-demand curve.”

Krugman had written this:

If you read Barro’s piece, what you see is a blithe dismissal of the whole notion that economies can ever suffer from am inadequate level of “aggregate demand” — the scare quotes are his, not mine, meant to suggest that this is a silly, bizarre notion, in conflict with “regular economics.”

I believe that is not a good characterization of Barro’s views and it is also an object lesson in the importance of the Ideological Turing Test. I would cite not only this piece, but also forty years of journal articles, many of which study the importance of nominal shocks and demand, albeit without (in general) using textbook AD-AS terminology. Indeed, Barro working with Herschel Grossman is one of the founding fathers of quantity-constrained Keynesian sticky-price macro and he is still citing this work favorably in his mid-1990s piece; see for instance Barro and Grossman (1971, 1974) and also their book from 1976: “This is a textbook on macroeconomic theory that attempts to rework the theory of macroeconomic relations through a re-examination of their microeconomic foundations. In the tradition of Keynes’s General Theory of Employment, Interest and Money…”

On the UI issue, I would note that the multiplier from transfers is likely unimpressive relative to the multiplier from government consumption.

Cihan Artunç is studying legal pluralism in the Ottoman Empire

by Tyler Cowen January 3, 2014 at 2:24 pm in

Here is the abstract from his job market paper, he is from Yale:

Throughout the eighteenth and nineteenth centuries, non-Muslim Ottomans paid large sums to acquire access to European law. These protégés came to dominate Ottoman trade and pushed Muslims and Europeans out of commerce. At the same time, the Ottoman firm remained primarily a small, family enterprise. The literature argues that Islamic law is the culprit. However, adopting European law failed to improve economic outcomes. This paper shows that the co-existence of multiple legal systems, “legal pluralism,” explains key questions in Ottoman economic history. I develop a bilateral trade model with multiple legal systems and first show that legal pluralism leads to underinvestment by creating enforcement uncertainty. Second, there is an option value of additional legal systems, explaining why non-Muslim Ottomans sought to acquire access to European law. Third, in a competitive market where a subpopulation has access to additional legal systems, agents who have access to fewer jurisdictions exit the market. Thus, forum shopping explains protégés’ dominance in trade. Finally, the paper explains why the introduction of the French commercial code in 1850 failed to reverse these outcomes.

There is further interesting work at the link.

Where are people respected the most?

by Tyler Cowen December 31, 2013 at 7:25 am in

Following up on Noah Smith’s earlier blog post, we discussed this question at lunch. Noah cites Japan as a country where there is a high degree of respect granted, and a relatively high equality of respect, and very likely that is true for artisans, manufacturing workers, foreign dignitaries, and foxes. But is it true more generally if we take into the position of women, who are often locked out of good jobs? How about the position of the young “lost generation,” namely all those guys with virtual girlfriends, who have given up on real sex and won’t leave their apartments? How about various minorities in Japanese society, such as the ethnic Koreans? Does Japan lose out on the forms of respect that come from large, extended families, as you might find say in Sicily?

Those judgments have some subjective elements, but I do think they bring Japan down a few notches when it comes to respect and equality of respect.

Oddly I think of the United States as a country with a fair degree of both respect and equality of respect. The diversity of niches and the diverse geography create many pathways for being thought highly of, or for thinking highly of oneself, and there are many insulations from the overweening standards of elites. And we have plenty of indifference, which is a kind of equality of respect, albeit not to be confused with respect per se.

Arguably the most powerful and influential men find plenty of respect in just about any society. A lot of the cross-national variation in respect might come on the female side of the ledger. That would likely favor the Nordic countries and Iceland in a ranking of respect.

Cowen’s Third Law says there is a literature on everything, but the most obvious Google searches did not yield concrete results. (There is however Richard Sennett’s Respect in a World of Inequality.) Can any MR readers speak to the empirical knowledge on this question? We all know the literature on happiness across nations, but here we are interested specifically in respect, where people are respected the most, and where equality of respect is most robust.

How would one go about measuring respect?

Addendum: Justin Wolfers suggest this link, and some Gallup World Poll data, showing respect is positively correlated with wealth:

Is American politics ruled by gridlock?

by Tyler Cowen December 22, 2013 at 7:34 am in

My latest New York Times column is here, and here is one excerpt:

Consider the financial crisis of 2008 and 2009. Coordinated actions by the Federal Reserve, the Treasury and Congress geared up rapidly, were decisive by global standards and received a fair amount of bipartisan support. In contrast, the euro zone is still discussing how to manage its bailouts or whether to start a program of quantitative easing, which the Federal Reserve will begin to wind down in January. And Japan, after letting problems with bad banks fester for decades, is only now using monetary policy to fight deflationary pressures.

After that initial decisiveness in the financial crisis, America did indeed slow down in policy innovation. Bailouts and our activist central bank have become extremely contentious factors in the nation’s politics, and there has been bitter fighting over how to set into motion the Dodd-Frank financial reform law.

Lunging and lurching forward with big changes, then enduring periods of backlash, consolidation and frustration, is often a better description of our political system than is “gridlock,” which is too unidimensional a concept to capture the reality.

At other times, because political flexibility is a fundamental part of the American system, it doesn’t feel as though we are defeating gridlock as much as bypassing it. Fracking — hydraulic fracturing — is reshaping the American energy sector, in part because of previous federal support for research and development, and in part because of regulatory tolerance: Many of the relevant changes took place through agencies like the Energy Department. In contrast, much of Europe is refusing to proceed with fracking at all. The American breakthrough has generated economic headlines, but rarely is it cited as an example of political success.

Do read the whole column. Two other examples are the building of the surveillance state and the shift toward ever-tougher forms of intellectual property protection, and the spread of that philosophy to other nations through the form of treaties. Sometimes we could use more gridlock, although I recognize that many people prefer to rail against it.

If you would like to read a defense of the gridlock view, here is Ornstein and Mann, noting that they confuse polarization with gridlock and don’t consider most of the examples and comparisons I raise. Their argument is closer to “we shouldn’t feel very good about how things have been running,” which I have no problem accepting. Here is Summers, responding to their critique., though he is more optimistic about the consequences of periodic non-gridlock than I am. Here is the original Summers Op-Ed. Many other contributions to the political science literature either predate the recent wave of rather considerable policy reform, focus on Congress, or focus on whether polarization is preventing us from addressing income inequality. I don’t intend those points as criticisms, simply a note that many of those pieces and books do not bear so directly on my thesis.

Best movies of 2013

by Tyler Cowen November 23, 2013 at 5:35 am in

Film

This has been an excellent year for movies, in fact I can’t remember a period so good. Here is what I liked, noting that foreign films are classified by “what year did I have a chance to see them?” and not by their initial years of release, which are usually pre-2013. Here goes, more or less in the order I saw them:

Amour, by Michael Haneke.

The Chilean movie NO, which is an account of how, even in the strangest of circumstances, democracies filter policy outcomes, as indeed autocracies do too (in different ways).

Spring Breakers

The Gatekeepers, I taught that one in Law and Literature class last year.

Room 237, an excellent mock on Straussians, through the medium of the fandom cult for Kubrick’s The Shining.

Oblivion

Stories We Tell

Before Midnight, completes the trilogy realistically, with charm and bite.

In a World…, “a subtle and entertaining movie with much economics in it, most of all the economics of superstars in the “voiceover” sector.”

The Autobiography of Nicolae Ceacescu, “is mesmerizing, like watching one of the great silent films of the past, and the scenes where the Chinese communists praise the Romanian communists are some of the best ever filmed.”

Pieta, brutal Korean brutal tale involving money lenders and non-price compensation schemes.

Fill the Void

World War Z

In Another Country, Korean and French juxtaposed.

The Attack, possibly my favorite of the year, if I had to pick. Lebanese and Israeli in its sources.

The Act of Killing, mostly set in Sumatra, brutal, has lots of social science.

Happy People: A Year in the Taiga, don’t tell Stevenson and Wolfers. Directed by Werner Herzog.

Gravity

Captain Phillips — treat the two embedded stories as implicit commentary on each other.

12 Years a Slave

Hollywood redeemed itself with those last three, after what was otherwise a dismal year for mainstream releases.

I loved the documentary In Search of Blind Joe Death: The Saga of John Fahey, although perhaps it is for fans only.

The crop of Christmas movies isn’t even out yet.

Final version of my International Trade class reading list

by Tyler Cowen September 1, 2013 at 2:19 pm

It is here under the fold, and I will still add some pieces, based on your earlier suggestions, though I have not read through them all yet…

International Trade reading list, Fall 2013

Books: Paul Krugman, Geography and Trade, and Development, Geography, and Economic Theory. Dani Rodrik, One Economics, Many Recipes, and Jacob Viner, Studies in the Theory of International Trade (on-line).

All videos can be found on MRUniversity.com, if not in the international trade section than in the development economics class or a few on Mexico in the Mexico class. In general I recommend viewing the videos before tackling the readings.

I. Comparative advantage and free trade

Bernhofen, Daniel and John C. Brown. 2005. “An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan.” American Economic Review.

Autor, David H. David Dorn and Gordon H. Hanson. 2013. “Untangling Trade and Technology: Evidence from Local Labor Markets.” NBER Working Paper.

Acemoglu, Daron, David Autor, David Dorn, and Gordon H. Hanson. 2013. “Import Competition and the Great US Employment Sag of the 2000s.” NBER Working Paper.

Feenstra, Robert C. 2008. “Offshoring in the Global Economy.” Ohlin Lecture Series.

Grossman, Gene M. and Esteban Rossi-Hansberg. 2006. “The Rise of Offshoring: It’s Not Wine for Cloth Anymore.” Federal Reserve Bank of Kansas City.

Grossman, Gene M. 2008. “Trading Tasks: A Simple Theory of Offshoring.” American Economic Review.

Donaldson, David. 2011. “Trade and Labor Markets.” powerpoint.

Khandelwal, Amit. 2009. “The Long and Short (of) Quality Ladders.” Review of Economic Studies.

Bernard, Andrew B., Stephen J Redding, and Peter K. Schott. 2012. “Testing the Factor Price Equality with Unobserved Differences in Factor Quality or Productivity.” U.S. Census Bureau Working Paper.

Baldwin, Richard. 2011. “How Trade and Industrial Organization After Globalization’s 2^nd Unblundling: How Building and Joining a Supply Chain are Different and Why it Matters.” NBER Working Paper.

Goldberg, Pinelopi Koujianou and Nina Pavcnik. 2007. “Distributional Effects of Globalization in Developing Countries.” Journal of Economic Literature.

Videos: The two videos on Comparative Advantage, Sources of Comparative Advantage, Development and Trade, empirical evidence, Evidence on Comparative Advantage from Japan, Factor price equalization, Specific Factors Models, Economics of Offshoring, The Rybczynski Theorem, Trade, Investment, and Migration as Substitutes, Unbundling the Supply Chain.

II.Free trade and tariffs

Paul Krugman. “The One-Minute Trade Policy Theorist.” (powerpoint)

Humphrey, Thomas M. 1987. “Classical and Neoclassical Roots of The Theory of Optimum Tariffs.” Economic Review, Federal Reserve Bank of Richmond.

Broda, Christian, Nuno Limao, and David Weinstein. 2008. “Optimal Tariffs and Market Power: The Evidence.” American Economic Review.

Arkolakis, Costas, Arnaud Costinot and Andres Rodriguez-Clare. 2012. “New Trade Models, Same Old Gains?” American Economic Review.

Kehoe, Timothy J. and Kim J. Ruhl. 2006. “How Important Is the New Goods Margin in International Trade?” NBER Working Paper, and now just published, Journal of Political Economy 2013.

Bernhofen, Daniel M., Zouheir El-Sahli, and RIchard Kneller. 2012. “Estimating the Effects of the Container Revolution on World Trade.” University of Nottingham Discussion Paper Series.

Nunn, Nathan and Daniel Trefler. 2010. “The Structure of Tariffs and Long-Term Growth.” American Economic Review.

Videos: Tariffs v. Quotas, International Trade Disciplines Monopolies, Effective rate of protection, Theory of Optimal Tariffs, Trade and Variety, Does “fair trade” help?, Malawi restrict trade in corn, Market reforms in Bangladesh, John Stuart Mill Terms of trade, The Shipping Container.

III. Heckscher-Ohlin and factor abundance theories of trade

Helpman, Elhanan. 1999. “The Structure of Foreign Trade.” Journal of Economic Perspectives.

Debaere, Peter. 2003. “Factor Abundance and Trade.” Journal of Political Economy.

Deardorff, Alan V. 1979. “Weak Links in the Chain of Comparative Advantage.” Journal of International Economics.

Trefler, Daniel. 1993. “International Factor Price Differences: Leontief Was Right!” Journal of Political Economy.

Davis, Donald R. and David E. Weinstein. 2001. “What Role for International Trade.” NBER Working Paper.

Davis, Donald R. 1995. “Intra-Industry Trade: A Heckscher-Ohlin-Ricardo Approach.” Journal of International Economics.

Deardorff, Alan V. 1982. “The General Validity of the Heckscher-Ohlin Theorem.” American Economic Review.

Videos: What is at Stake in Trade Theories?, The Heckscher-Ohlin Theorem, Evidence on the Heckscher-Ohlin Theorem.

IV. Increasing Returns

Donaldson, David. “Increasing Returns to Scale and Monopolistic Trade.” Powerpoint, on-line.

Helpman, Elhanan. 1987. “Imperfect Competition and International Trade: Evidence from Fourteen Industrial Countries.” Journal of the Japanese and International Economics.

Davis, Donald R. and David E. Weinstein. 2003. “Market Access, Economic Geography, and Comparative Advantage: An Empirical Test.” Journal of International Economics.

Baldwin, Richard and James Harrigan. 2010. “Zeros, Quality, and Space: Trade Theory and Trade Evidence.” NBER Working Paper.

Antweiler, Werner and Daniel Trefler. 2000. “Increasing Returns and All That: A View from Trade.” NBER Working Paper.

Debaere, Peter. 2005. “Monopolistic Competition and Trade, Revisited: Testing the Model Without Testing for Gravity.” Journal of International Economics.

Yi, Kei-Mu. 1999. “Can Vertical Specialization Explain the Growth of World Trade?” Journal of Political Economy.

Harrigan, James. 2001. “Specialization and the Volume of Trade: Do the Data Obey the Laws?” NBER Working Paper.

Bernard, Andrew B., J. Bradford Jensen, Stephen Redding, and Peter K. Schott. 2007. “Firms in International Trade.” NBER Working Paper.

Helpman, Elhanan. 2013. “Foreign Trade and Investment: Firm-Level Perspectives.” NBER Working Paper.

Tybout, James R. 2001. “Plant- and Firm-Level Evidence on “New” Trade Theories.” NBER Working Paper.

Bernard, Andrew B. and J. Bradford Jensen. 2004. “Why Some Firms Export.” Review of Economics and Statistics.

Videos: Trade and External Economies of Scale, Monopolistic Competition and International Trade, Trade and Increasing Returns: Evidence, Paul Romer, Robert Torrens on strategic trade policy, The Economics of Bollywood.

V. Gravity models

Anderson, James and Eric van Wincoop. 2004. “Trade Costs” Journal of Economic Literature.

Head, Keith. 2011. “Gravity for Beginners.” Presented at US-Canada Border Conference.

Hummels, David. 2007. “Transportation Costs and International Trade in the Second Era of Globalization.” Journal of Economic Perspectives.

Deardorff, Alan V. 1998. “Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?” NBER Working Paper.

Feenstra, Robert C., James R. Markusen, and Andrew K. Rose. 2001. “Using the Gravity Equation to Differentiate Among Alternative Theories of Trade.” The Canadian Journal of Economics.

Evenett, Simon J. and Wolfgang Keller. 1998. “On Theories Explaining the Success of the Gravity Equation.” NBER Working Paper.

Trefler, Daniel. 1995. “The Case of the Missing Trade and Other Mysteries.” American Economic Review.

Anderson, James and Eric van Wincoop. 2003. “Gravity with Gravitas: A Solution to the Border Puzzle.” American Economic Review.

Novy, Dennis. 2012. “Gravity Redux: Measuring International Trade Costs with Panel Data.” Economic Inquiry.

Eaton, Jonathan and Samuel Kortum. 2002. “Technology, Geography, and Trade.” Econometrica.

Donaldson, David. 2011. “Gravity Models.” No Journal—powerpoint.

Rossi-Hansberg, Esteban. 2005. “A Spatial Theory of Trade.” American Economic Review.

Chaney, Thomas. 2008. “Distorted Gravity: The Intensive and Extensive Margins of International Trade.” American Economic Review.

Anderson, James E. 1979. “A Theoretical Foundation for the Gravity Equation.” American Economic Review.

Video: The Gravity Equation and the Costs of Trade.

VI. Trade in economic history

Blecker, Robert A. 1997. “The ‘Unnatural and Retrograde Order’: Adam Smith’s Theories of Trade and Development Reconsidered.” Economica.

Irwin, Douglas. 2002. “Interpreting the Tariff-Growth Correlation of the Late Nineteenth Century.” American Economic Review.

Irwin, Douglas. 2002. “Did Import Substitution Promote Growth in the Late Nineteenth Century?” NBER Working Paper.

Clemens, Michael A. and Jeffrey G. Williamson. 2001. “A Tariff-Growth Paradox? Protection’s Impact on the World Around 1875-1997.” NBER Working Paper.

John Nye, “The Myth of Free Trade Britain and Fortress France,” Journal of Economic History, 1991.

Harrison, Ann and Andres Rodriguez-Clare. 2009. “Trade, Foreign Investment, and Industrial Policy for Developing Countries.” NBER Working Paper.

Irwin, Douglas. 1997. “From Smoot-Hawley to Reciprocal Agreements: Changing the Course of U.S. Trade Policy in the 1930s.” NBER Working Paper.

Irwin, Douglas. 1998. “The Smoot-Hawley Tariff: A Quantitative Assessment.” The Review of Economic Statistics.

Crowley, Meredith A. and Xi Luo. 2011. “Understanding the Great Trade Collapse of 2008-09 and the Subsequent Trade Recovery.” Journal of Economic Perspectives.

Gopinath, Gita and Oleg Itskhoki. 2009. “Trade Prices and the Global Trade Collapse of 2008-2009.” NBER Working Paper.

Francois, Joseph and Julia Woerz. 2009. “The Big Drop: Trade and the Great Recession.” No Journal, article online.

Videos: Corn Law debates, Friedrich List, Robert Torrens on sliding tariffs, The deindustrialization of India, Tariffs and Growth in the late 19^thCentury, South Korea and Industrial Policy, The Smoot-Hawley Tariff, Why Did Trade Plummet in the Great Recession?

VII. FDI and multinationals

Blonigen, Bruce A. 2005. “A Review of the Empirical Literature on FDI Determinants.” NBER Working Paper.

Ramondo, Natalia and Andres Rodriguez-Clare. 2009. “Trade, Multinational Production, and the Gains from Openness.” NBER Working Paper.

Antras, Pol and Stephen R. Yeaple. 2013. “Multinational Firms and the Structure of International Trade.” NBER Working Paper.

Videos: Basics of multinational corporations, Intra-firm Trade, Intra-industry Trade, Gains from Multinationals, Who Gains from FDI?, Productivity in firms, Foreign investment in India, Competition from foreign retailers, What is a Maquiladora? Introduction to NAFTA, NAFTA and Mexican Agriculture, The Effect of NAFTA on the Mexican Economy.

VIII. The politics of trade

Grossman, Gene M. and Elhanan Helpman. 1994. “Protection for Sale.” American Economic Review.

Goldberg, Pinelopi Koujianou and Giovanni Maggi. 1999. “Protection for Sale: An Empirical Investigation.” American Economic Review.

Mayda, Anna Maria and Dani Rodrik. 2005. “What are Some People (and Countries) More Protectionist than Others?” European Economic Review.

Grossman, Gene M. and Elhanan Helpman. 1995. “The Politics of Free-Trade Agreements.” American Economic Review.

Harrison, Ann and Jason Scorse. 2010. “Multinational and Anti-Sweatshop Activism.” American Economic Review.

Videos: The Political Economy of Tariffs, Does Trade Help the Environment?, Regulation as a Major Trade Barrier, Who Supports Free Trade?, The Cultural Diversity Critique of Markets.

Some extra readings and videos will be added, as global events indicate.

My International Trade reading list

by Tyler Cowen August 9, 2013 at 11:33 am in

Many people have been asking me for this. It’s not yet finished, but you can find the current version under the fold of this post. Suggestions for adding are of course welcome…

Books: Paul Krugman, Pop Internationalism, Geography and Trade, and Development, Geography, and Economic Theory. Dani Rodrik, One Economics, Many Recipes, and Jacob Viner, Studies in the Theory of International Trade (on-line).

All videos can be found on MRUniversity.com, if not in the (forthcoming, in September) international trade section than in the development economics class or a few on Mexico in the Mexico class. In general I recommend viewing the videos before tackling the readings.

I. Comparative advantage and free trade

Bernhofen, Daniel and John C. Brown. 2005. “An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan.” American Economic Review.

Autor, David H. David Dorn and Gordon H. Hanson. 2013. “Untangling Trade and Technology: Evidence from Local Labor Markets.” NBER Working Paper.

Acemoglu, Daron, David Autor, David Dorn, and Gordon H. Hanson. 2013. “Import Competition and the Great US Employment Sag of the 2000s.” NBER Working Paper.

Goldberg, Pinelopi Koujianou and Nina Pavcnik. 2007. “Distributional Effects of Globalization in Developing Countries.” Journal of Economic Literature.

Videos: The two videos on Comparative Advantage, Sources of Comparative Advantage, Development and Trade, empirical evidence, Evidence on Comparative Advantage from Japan.

II.Free trade and tariffs

Paul Krugman. “The One-Minute Trade Policy Theorist.” (powerpoint)

Humphrey, Thomas M. 1987. “Classical and Neoclassical Roots of The Theory of Optimum Tariffs.” Economic Review, Federal Reserve Bank of Richmond.

Broda, Christian, Nuno Limao, and David Weinstein. 2008. “Optimal Tariffs and Market Power: The Evidence.” American Economic Review.

Arkolakis, Costas, Arnaud Costinot and Andres Rodriguez-Clare. 2012. “New Trade Models, Same Old Gains?” American Economic Review.

Kehoe, Timothy J. and Kim J. Kuhl. 2006. “How Important Is the New Goods Margin in International Trade?” NBER Working Paper.

Bernhofen, Daniel M., Zouheir El-Sahli, and RIchard Kneller. 2012. “Estimating the Effects of the Container Revolution on World Trade.” University of Nottingham Discussion Paper Series.

Nunn, Nathan and Daniel Trefler. 2010. “The Structure of Tariffs and Long-Term Growth.” American Economic Review.

Videos: Tariffs v. Quotas, International Trade Disciplines Monopolies, Effective rate of protection, Theory of Optimal Tariffs, Does “fair trade” help?, Malawi restrict trade in corn, Market reforms in Bangladesh, John Stuart Mill Terms of trade, The Shipping Container.