Classics from the American Economic Review
By Arnold Kling
This list, compiled by a committee that includes Kenneth Arrow and several other superstars, consists of twenty articles. I think one could make a pretty good case that a professional economist ought to be familiar with every article. For example, the selectors include Anne O. Krueger on the poltiical economy of rent-seeking. About this article, the selectors write,
The paper’s central finding is that competitive rent-seeking increases the welfare costs of policies such as trade restrictions. In the context of import restrictions, this result strengthens the case for the use of tariffs rather than import quotas, since quotas create the possibility of rent-seeking behavior.
If applied to carbon emissions policy, this would imply that a tax will be more efficient than cap-and-trade. (Of course, rent-seeking may take the form of fighting for special favors within the tax mechanism.)
It struck me that the most recent article on this list comes from 1981(!). Pretty much all of these articles were available back when I was in graduate school (I got my degree in 1980). For the last thirty years, has reading the AER been in a total waste? Honestly, I’ve often felt that way.