Band 3, Heft 5

Santa Clara County in California was the world capital of the dot-com economy before the bubble burst. Yet since the dot-com bubble burst housing prices have continued to rise. John Quigley asks: What's going on?

On July 21, 2005, China gave in to concerted foreign pressure—some of it no doubt well meant—to give up the fixed exchange rate it had held and grown into over the course of a decade. American pressure on China today to appreciate the renminbi is eerily similar to the American pressure on Japan that began almost 30 years ago to appreciate the yen against the dollar. There are some differences, but downward pressure on interest rates from foreign exchange risk could lead China into a zero-interest liquidity trap much like the one Japan has suffered since the mid-1990s.

John Donohue and Justin Wolfers argue that Gary Becker and Richard Posner are wrong to think that the death penalty deters murder: they find little empirical support for the claim. If anything, when one looks over the longest period possible (1934-2000) there is more evidence that the death penalty stimulates murder than that it deters murder.

Donohue and Wolfers comment on an article where I was a coauthor. There are some errors and misstatements in their article that should be corrected.

Thomas Russell and Dwight Jaffee argue that private markets should be able to insure against catastrophes like Hurricane Katrina or 9/11, but if government must, then it should follow the same actuarially based pricing and reserving rules that would be followed by a competitive private market.

Contrary to Paul Rubin's recent testimony to the Senate Judiciary Committee, we believe the fragility of their estimates and the invalidity of their instrumental variables undermine Dezhbakhsh, Rubin, and Shepherd's work as evidence that the death penalty deters murder.