Interesting Reading (1) -- Below is a graph of the past 109 years of Price/Book ("Q") Ratio (in red) and the Cyclically Adjusted Price/Earnings ("CAPE") Ratio (in blue). (See http://en.wikipedia.org/wiki/P/E_ratio ,  http://en.wikipedia.org/wiki/Tobin's_q ) Q is the market cap divided by the "replacement value" of the company itself.  In equilibrium, q should approach a value of 1. The ratio below is logged, so a ratio of 1 would have a value of 0.

Graphic from a review of a new book by Andrew Smithers,  http://www.ft.com/cms/s/0/38164e12-c330-11de-8eca-00144feab49a.html  To read more,  go to the website for Valuing Wall Street by Smithers and Wright, http://www.smithers.co.uk/faqs.php   You can also download their spreadsheet for q at http://www.ems.bbk.ac.uk/faculty/wright/pdf/Wright2004dataset.xls.   An interesting summary of their case is made in the following paper by Wright: "Measures of Stock Market Value and Returns for the US Nonfinancial Corporate Sector, 1900-2002": http://www.ems.bbk.ac.uk/faculty/wright/pdf/wrightReviewOfIncomeAndWealth2004.pdf

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Research Links for Economics

IDEA Database of Economic Research, now based at the University of Connecticut, is the largest FREE database of research papers in economics.

The Economist .  The best weekly news magazine in the English language, Time Magazine for grown-ups.  Widely read by corporate and government policy makers, and by professional economists.  The "premium" material on this Economist web site is only accessible via a Rensselaer subscription; you will need your Rensselaer login ID to get the code.  Go to the library's link for the Economist 

  RFE -- Resources for Economists on the Internet This is the most widely-used general gateway for economic data-links. Be sure to look at the Short-cuts section for a general listing. Three of the most commonly used and most interesting links are given below.

 Economic Data & Links This is a good quick look at the most commonly used US data sources.

  International Economics Gateway The name says it all.

WEBSITES of some prominent economists:       Brian Arthur    Samuel Brittan     Bradford DeLong     Nicholas Economedis   Paul Krugman  Barry Nalebuff   Stephen Roach  Nourile Roubini   Robert Shiller  Joseph Stiglitz    Hal Varian  

Debates about The IMF Joe Stiglitz, the chief economist at the World Bank , was recently forced to step down. This may be because he had initiated a fundamental criticism of the IMF as a 'global central bank'. This was similar to the way, in the 1930s, J.M. Keynes said that the Fed and the Bank of England were doing exactly the wrong things.

  Economics of the Internet, Information Goods Maintained by Hal Varian, a well-known micro-economist and Dean at UC Berkeley’s School of Information Management & Systems. This is the best source for "Network Externalities," a very hot topic.

More on Network Externalities by Brian Arthur, the economist whose ideas helped launch the case against Microsoft.
 
 Debates about Intellectual Property on the Web A listing of organizations and publications engaged in the battle to define and protect ownership for that form of wealth most valuable in the information age.

The Third Industrial Revolution: Technology, Productivity, and Income Equality , by Jeremy Greenwood.  A brilliant paper, relating paradoxes of the IT revolution to earlier revolutions in (1) railroads and (2) electrification.  Really helps to clarify many recent debates about the "Internet bubble" in equity markets, the long productivity slump of 1972-1995, and rising income inequality.  Published by the Federal Reserve of Cleveland.
 
 

New Management Techniques based on Economic Principles

Open Book Management This is an approach based on the idea that everyone in the business organization should understand the basic financial and "score", how that firm is doing.And they should be given a stake in making those numbers better. The "Great Game of Business" is a well-known program that first pioneered this approach.

The Maxager System Information Technology can now give the real-time monitoring of "marginal" costs and products -- the data that make basic economic optimization possible. Business organizations can finally begin to make the "optimal" decisions pictured in simple-minded economic textbooks.
 
 

More Specialized Research

Bio-economics tries to promote the idea that economies are more like living systems than like mechanical objects. Interestingly enough, the founder of this group, Michael Rothschild, author of "Bionomics" , is also helping to make the good old profit mechanism within firms work better, by integrating IT process monitoring and feedback with basic optimization techniques. (See the entry for Maxager above.)

  The Santa Fe Institute The high-powered and increasingly influential world of non-linear, "complexity" approaches to economics and other "Complex Evolving Systems." Fascinating computer graphic simulations of evolutionary processes.

University of Iowa's Electoral "Stock Market" This is a game in which you can buy "stock" in one candidate’s winning a Congressional or Presidential race. It has shown itself to be far more accurate than ordinary polling, and much cheaper besides!  The following links give the most recent market price on how Kerry and Bush will split their percentage of the popular vote, and the following gives the percentage probabilities that each will win the race.

Money – Past, Present & Future This is, IMHO, the best link on my list – a rare mix of history, economics, and financial-political debate. You may think you know what money is, but that’s probably an illusion. It’s amazing how little economists really understand about this force that "makes the world go round."

EXPERIMENTAL ECONOMICS SITES:  This research is changing our understanding of how decisions get made, and how markets actually work.  The University of Virginia's Veconab is an excellent site with tools for running online experiments.  Here you can LOGON to the VECONLAB. The University of Arizona's Economics Science Lab is another research program on controlled laboratory experiments.

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**Complementary Credit Networks and Macro-Economic Stability** uses data from a Swiss barter network to argue that large scale internet barter helps to stabilize the business cycle.  My paper was recently invited for a 2nd presentation to the Central Bank of Brazil, and is forthcoming in the Journal of Economic Behavior and Organization.  A translation of the Swiss banking magazine article, which appeared in both German and French, is available in the magazine of WirBank.  Barter networks have recently attracted the attention of leading policy makers like Mervyn King, Deputy Director of the Bank of England. 

 

Connecticut's State' Tax Expenditures' -- a form of spending 'Best Left in the Dark'  (Testimony before the State State Legislatures Joint Finance Committee, April 2005.

 **'"Un-corruption", Education, and Health as Complementary Public Goods'  The criminalization of international bribery, which was done only by the United States beforel the late 1990s, is now widespread, but has not yet been very effective in reducing corruption. This paper’s focus is on other measures against corruption, such as requiring improved corporate governance, and, especially, on improving public goods, such as education and health care.  The paper starts with the empirical observation that income growth within a poor country may not mean less corruption. Empirically, it tends to mean more corruption. This paper finds that better provision of public health and education outcomes improves voluntary social provision of other public goods, such as transparency and the rule of law.  A version of this paper was delivered at the XIII World Congress of the International Economics Association in Lisbon, Portugal, August 2002.

** Scientific and Engineering Workers: Education Supplies, Occupational Demands **  A look at the relationship between scientific/technical education and the demand for highly educated workers.  Using a newly-developed data set, the paper concludes that educational supply may be highly responsive, especially in the lower degree programs, to modest increases in salaries.  A shorter version of this paper was presented at the 2002 IEMC (International Engineering Management Conference) in Cambridge, England. 

** Macroeconomic Stability of Centralized and Decentralized Exchange: Anthropological Data ** This paper revisits an anthropological and historical data set I used years ago, and tests implications about macro-economic stability.  It is a companion piece to the "Reciprocal Networks" piece mentioned in the previous section.

** "Consumer Confidence and Income Inequality" ** tests the degree to which income distribution can explain changes in US Consumer Confidence. This paper was delivered at the XII World Congress of the International Economics Association in Buenos Aires, August 1999. The statistical tests give surprisingly high estimates for Atkinson’s parameter of "inequality aversion", the social preference for more equality relative to more growth.

 ** "The Case for Redistributive Liberalism" appears in a "discussion roundtable" on Eastern Europe in Economic Systems (March ‘98) published by the Osteruopa Institut of the University of Munich. I argue that the dramatic growth of inequality in Russia and most East European countries has slowed development, in contrast with property-redistributing market reforms that have spurred the remarkable growth of China and Vietnam.

** "Have Most People Benefited from the Recovery?" in the Winter 1998 issue of The Connecticut Economy , published by the Connecticut Center for Economic Analysis at the University of Connecticut. Contrary to most reports, something like a majority of CT residents were poorer by 1996 than in 1992, the end of the last recession. The article considers how this is possible in a "recovery." Census Bureau data on state-level income distribution are available, and deserve more analysis than they have so far received.
 

I have a long term interest in The Evolution of Exchange Systems seen in "primitive" economies through anthropology, in economic history, and in current technological developments. This is based on my earlier articles on the Evolution of Complexity in Primitive Economies and Corporate Barter .

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Some Other Publications

(Fully downloadable articles are ** starred, those un-starred and are available here only in a summary form.)  

**  Recent op-eds in the HARTFORD COURANT newspaper:  

China's Great Wall, and Ours,   A Bailout that puts Taxpayers First, 

Property Taxes Perpetuate Inequality,   China as an Economic Rival.