JPE Awards Inaugural Robert E. Lucas, Jr. Prize

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The Journal of Political Economy has awarded the inaugural Robert E. Lucas, Jr. Prize to Boyan Jovanovic and Peter L. Rousseau, for “Extensive and Intensive Investment over the Business Cycle” (JPE 122[4]: 863-908). Their paper empirically shows that extensive investment (i.e., creation of new firms) rises with aggregate Tobin's Q, while intensive investment (i.e., investment of established firms) falls, and provides a helpful model for understanding this novel fact. A more rapid technological change makes it harder to adapt existing capital. This raises Q and thereby provides new entrants with a comparative advantage. The paper therefore makes a substantial contribution to understanding the dynamic economics of technological change and investment choices. The award was established last year to commemorate the occasion of Lucas’ receiving the Phoenix Prize, celebrating his seminal contributions to economics. It is awarded biannually for "the most interesting paper in the area of Dynamic Economics" published in the Journal of Political Economy in the preceding two years.

Study Suggests Hydraulic Fracturing Boosts Local Economies

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In the first comprehensive nationwide study of hydraulic fracturing's impact on local economies where the technique is used, the results suggest that "fracking" provides net economic benefits, including increased income, employment, and housing prices. Taking into account "local changes in amenities, including factors...such as truck traffic, criminal activity, and beliefs regarding negative health effects," Energy Policy Institute at Chicago (EPIC) director Michael Greenstone and his coauthors found fracking's costs are outweighed by the benefits, which "total $1,200 to $1,900 a year for the average household." Read full story»

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