Social democratic governments in Australia and New Zealand adopted policies of radical free-market reform, including financial deregulation, privatization, and public-sector reform in the 1980s. Because of the absence of institutional obstacles to government action, reform was faster and more...

Although substantial current account deficits can be sustained indefinitely, large deficits in goods and services trade cannot be. Even to stabilise the current account deficit, the United States must restore balance in goods and services trade within a decade or so. If this adjustment is to be...

Simon Grant and John Quiggin argue that taking the equity premium seriously---the well-known fact that the average annual historical return of stocks is seven times that of government bonds and other debt---has many implications, the most robust of which is that recessions are extremely costly...

Thomas Grennes's letter criticizing my article, "The Unsustainability of the US Trade Deficit," fails to distinguish between the trade deficit and the current account deficit, and therefore does not respond to my argument.

We find that prospect theory behaviour is significantly more prevalent than utility theory behavior in experiments involving multiple, real items. In the experiments, subjects were endowed with three items and asked the minimum payments they required to be willing to return one, two, or three of...

The idea of representing choice under uncertainty as a trade-off between mean returns and some measure of risk or uncertainty is fundamental to the analysis of investment decisions. In this paper, we show that preferences can be characterized in this way, even in the absence of objective...