The Concise Encyclopedia of Economics


Clifford W. Smith

Bond markets are important components of capital markets. Bonds are fixed-income financial assets--essentially IOUs that promise the holder a specified set of payments. The value of a bond, like the value of any other asset, is the present value of the income stream one expects to receive from holding the bond....

Because the U.S. government's tax revenues rarely cover expenditures, it relies on debt financing for the balance. Moreover, on the occasions when the government does not have a budget deficit, it still sells new debt to refinance the old debt as it matures. Most of the debt sold by the U.S. government is marketable, meaning that it can be resold by its original purchaser....



George J. Borjas


Benjamin Powell and Edward Stringham

Creative Destruction

W. Michael Cox and Richard Alm


Jerry Taylor and Peter Van Doren

Health Care

Michael A. Morrisey

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Kenneth Arrow


In 1972 American economist Kenneth Arrow, jointly with Sir John Hicks, was awarded the Nobel Prize in economics for "pioneering contributions to general equilibrium theory and welfare theory." Arrow is probably best known for his Ph.D. dissertation (on which his book Social Choice and Individual Values is based), in which he proved his famous "impossibility theorem."...

Arrow was also one of the first economists to note the existence of a learning curve. His basic idea was that as producers increase output of a product, they gain experience and become more efficient. "The role of experience in increasing productivity has not gone unobserved," he wrote, "though the relation has yet to be absorbed into the main corpus of economic theory." More than forty years after Arrow's article, the learning curve insight has still not been fully integrated into mainstream economic analysis....