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100 Economics B E G P DSGE M Firms, Contracts, and Trade Structure E P. H P A F S Global Production is the first book to provide a fully comprehensive overview of the complicated issues fac- Dynamic stochastic general equilibrium (DSGE) ing multinational companies and their global sourcing models have become one of the workhorses of strategies. Few international trade transactions today modern macroeconomics and are extensively used for are based on the exchange of finished goods; rather, academic research as well as forecasting and policy the majority of transactions are dominated by sales analysis at central banks. This book introduces read- of individual components and intermediary services. ers to state-of-the-art computational techniques used Many firms organize global production around offshor- in the Bayesian analysis of DSGE models. The book ing parts, components, and services to producers in covers Markov chain Monte Carlo techniques for lin- distant countries, and contracts are drawn up specific earized DSGE models, novel sequential Monte Carlo to the parties and distinct legal systems involved. Pol methods that can be used for parameter inference, Antràs examines the contractual frictions that arise in and the estimation of nonlinear DSGE models based the international system of production and how these on particle filter approximations of the likelihood frictions influence the world economy. function. The theoretical foundations of the algo- Antràs discusses the inevitable complications rithms are discussed in depth, and detailed empirical that develop in contract negotiation and execution. applications and numerical illustrations are provided. He provides a unified framework that sheds light on The book also gives invaluable advice on how to tailor the factors helping global firms determine production these algorithms to specific applications and assess locations and other organizational choices. Antràs the accuracy and reliability of the computations. also implements a series of systematic empirical tests, Bayesian Estimation of DSGE Models is essential based on recent data from the U.S. Customs and reading for graduate students, academic researchers, Census Offices, which demonstrate the relevance of and practitioners at policy institutions. contractual factors in global production decisions. Edward P. Herbst is an economist in the Division of Using an integrated approach, Global Production is Research and Statistics at the Federal Reserve Board. an excellent resource for researchers, graduate students, Frank Schorfheide is professor of economics at the and advanced undergraduates interested in the inner University of Pennsylvania and research associate at workings of international economics and trade. the National Bureau of Economic Research. Pol Antràs is the Robert G. Ory Family Professor of THE ECONOMETRIC AND TINBERGEN INSTITUTES LECTURES Economics at Harvard University and a research as- Herman K. van Dijk, Series Editor sociate at the National Bureau of Economic Research. FEBRUARY CREI LECTURES IN MACROECONOMICS Cloth $49.50S Jaume Ventura, Series Editor 978-0-691-16108-2 232 pages. 50 line illus. JANUARY 1 1 23 tables. 5 ⁄2 x 8 ⁄2. Cloth $49.50S ECONOMICS 978-0-691-16827-2 344 pages. 32 line illus. 27 tables. 6 x 9. ECONOMICS Economics 101 HOW AMERICAN INDUSTRIES ROSE E¡¢ C¢ TO DOMINATE THE ECONOMIC LANDSCAPE The Nanoeconomics of American High-Tech Industries IN THE TWENTIETH CENTURY S¤ K ¢¢ Edited by Serguey Braguinsky, David A. Hounshell & John H. Miller For much of the twentieth century, American corporations led “Experimental Capitalism is an important the world in terms of technological progress. Why did certain work by an important scholar. Shedding industries have such great success? Experimental Capitalism light on the question of where great indus- examines six key industries—automobiles, pneumatic tires, tries come from, the book provides a unique television receivers, semiconductors, lasers, and penicil- perspective on the American economy and lin—and tracks the highs and lows of American high-tech challenges much of the traditional thinking capitalism and the resulting innovation landscape. Employing about what matters for delivering strong “nanoeconomics”—a deep dive into the formation and func- economic performance.” tioning of companies—Steven Klepper determines how specific companies emerged to become the undisputed leaders that —David Audretsch, Indiana University altered the course of their industry’s evolution. Klepper delves into why a small number of firms came to “The work of an original economist, Experi- dominate their industries for many years after an initial period mental Capitalism uses six major industries of tumult, including General Motors, Firestone, and Intel. as exemplars of a theory of shakeouts. This Even though capitalism is built on the idea of competition book succeeds admirably.” among many, he shows how the innovation process naturally —Stephen Martin, Purdue University led to such dominance. Klepper explores how this domination influenced the search for further innovations. He also consid- ers why industries cluster in specific geographical areas, such as semiconductors in northern California, cars in Detroit, and tires in Akron. He finds that early leading firms serve as involuntary training grounds for the next generation of entre- preneurs who spin off new firms into the surrounding region. Klepper concludes his study with a discussion of the impact of government and the potential for policy to enhance a nation’s high-tech industrial base. A culmination of a lifetime of research and thought, Experimental Capitalism takes a dynamic look at how new ideas and innovations led to America’s economic primacy. Steven Klepper (1949–2013) was the Arthur Arton Hamerschlag Professor of Economics and Social Science at Carnegie Mellon University. Klepper was a founding member of the Doctoral Col- loquium of the Consortium for Competitiveness and Collabora- tion, and served as director of CMU’s program in Strategy, En- trepreneurship, and Technological Change. Serguey Braguinsky is associate professor of economics, David A. Hounshell is the FEBRUARY David M. Roderick Professor of Technology and Social Change, Cloth $39.95S and John H. Miller is professor of economics and social science, 978-0-691-16962-0 all at Carnegie Mellon University. 272 pages. 18 line illus. 12 tables. 6 x 9. THE KAUFFMAN FOUNDATION SERIES ECONOMICS z BUSINESS ON INNOVATION AND ENTREPRENEURSHIP PRESS.PRINCETON.EDU 102 Economics / Ancient History A¤ REANNOUNCING I T T M¦ Theory and Evidence A G Second Edition E Institutions, Markets, and Growth in the City-States R C. F A B Trade is a cornerstone concept in economics world- Translated by Steven Rendall wide. This updated second edition of the essential graduate textbook in international trade brings readers to the forefront of knowledge in the field and prepares This comprehensive introduction to the ancient Greek students to undertake their own research. In Advanced economy revolutionizes our understanding of the International Trade, Robert Feenstra integrates the subject and its possibilities. Alain Bresson is one of most current theoretical approaches with empirical the world’s leading authorities in the field, and he is evidence, and these materials are supplemented in helping to redefine it. Here he combines a thorough each chapter by theoretical and empirical exercises. knowledge of ancient sources with innovative new ap- Feenstra explores a wealth of material, such as the proaches grounded in recent economic historiography Ricardian and Heckscher-Ohlin models, extensions to to provide a detailed picture of the Greek economy many goods and factors, and the role of tariffs, quotas, between the last century of the Archaic Age and the and other trade policies. He examines imperfect com- closing of the Hellenistic period. Focusing on the city- petition, offshoring, political economy, multinationals, state, which he sees as the most important economic endogenous growth, the gravity equation, and the institution in the Greek world, Bresson addresses all of organization of the firm in international trade. Feenstra the city-states rather than only Athens. also includes a new chapter on monopolistic competi- The book offers a groundbreaking new theoreti- tion with heterogeneous firms, with many applications cal framework for studying the economy of ancient of that model. In addition to known results, the book Greece; presents a masterful survey and analysis of looks at some particularly important unpublished the most important economic institutions, resources, results by various authors. Two appendices draw on and other factors; and addresses some major historio- index numbers and discrete choice models to describe graphical debates. Among the many topics covered are methods applicable to research problems in interna- climate, demography, transportation, agricultural pro- tional trade. duction, market institutions, money and credit, taxes, Completely revised with the latest developments exchange, long-distance trade, and economic growth. and brand-new materials, Advanced International The result is an unparalleled demonstration that, Trade is a classic textbook that will be used widely by unlike just a generation ago, it is possible today to students and practitioners of economics for a long study the ancient Greek economy as an economy and time to come. not merely as a secondary aspect of social or political history. This is essential reading for students,