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Applying Reputation Data to Enhance Investment Performance
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Simon Cole, Mike Brown & Brian Sturgess, World Economics, December 2014
The fact that corporate reputations deliver tangible shareholder value has been recognised by managers for some time. More recently, techniques have emerged that allow them to measure just how much value reputation delivers and identify the driving factors in order to structure communications and corporate messaging accordingly. While these techniques are having a marked affect on how companies are managing their reputation assets their use also has implications for investors. This paper uses reputation data to analyse the share price performance of companies identified as over- or under-valued. Evidence is found that where reputations are such that they suggest the companies are under-valued, that over time their market capitalizations grow at a greater rate than those whose reputations suggest over-valuation. This implies company reputation can be a powerful leading edge indicator to estimate investor returns and thus contribute to fund management.
Measuring the Asia-Pacific Region
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Brian Sturgess, World Economics, September 2014
The Asia-Pacific region covers the countries around the Pacific Rim, South East Asia, the Indian Sub-Continent and Oceania. It contains three of the world’s largest economies outside the US: China, India and Japan. The quality of economic statistics varies widely across the region mainly because of differences in the resources available to national statistical offices in the large number of poorer countries. There are other data problems affecting inter-country comparisons: the use of old standards of national income accounting; the degree to which shadow and informal economies are under-recorded; and the use of outdated base years for the calculation of real GDP. On top of these issues is the continuing question about the extent to which China’s economic data is subject to political manipulation.
Data Manipulation of Inflation Statistics Artificially Raises Real GDP
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Christopher Balding, World Economics, June 2014
Baseline Chinese economic data are unreliable. Taking published National Bureau of Statistics China data, three problems appear. First, base data on housing price inflation are manipulated. Second, the NBSC misclassifies most Chinese households as private housing occupants. Third, the NSBC applies a straight 80/20 urban/rural private housing weighting. To correct for these manipulative practices, I use third party and related NBSC data to correct the change in consumer prices in China between 2000 and 2011. I find that using conservative assumptions about price increases, the annual CPI in China should be adjusted upwards by approximately 1%. This reduces real Chinese GDP by 8–12% or more than $1 trillion in PPP terms.
Measuring Argentina’s GDP Growth
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Ariel Coremberg, World Economics, March 2014
The main purpose of this paper is to report on the results of an exhaustive reworking of Argentina’s output growth by industry realized by the ARKLEMS+LAND Argentina Productivity and Competitiveness Project. The aim was to reproduce a GDP time series since 1993 using traditional Argentinean national accounting methodology in order to check economic growth against official statistics produced after political intervention in the work of the National Statistics institute since 2007. The reproduced ARKLEMS GDP series closely approximates to official GDP between 1993 and 2007 at macro and industry level. But after 2007, Official series showed a higher growth than ARKLEMS reproducible (29.4% Official GDP vs. 15.9% ARKLEMS GDP for 2007–2012). However, the gap between the series is not related to the use of biased CPI deflators, but it is due to the abandoning of traditional methodology followed by Argentinean national accounts prior to its intervention. The paper shows that Argentina’s recent growth episode of 2002–2012 was similar to the previous positive growth cycle period of 1990–1998. Argentina was not the growth champion of the Latin America region during the later period, but it has one of the highest rates of volatility of GDP across Latin America. Argentine official GDP data has been subject to the so-called ‘Pandora’s Box’ effect as a result of the political intervention in the production of official statistics.
New Data on Global Differences in Family Offices
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Robert Eigenheer, World Economics, March 2014
A family office is not a specifically-defined institution per se. Rather, the family office is a broad concept to cover all financial needs of one or more wealthy families. While in the United States the first family offices were established in the nineteenth century, interest in the family office concept has recently been growing in emerging markets around the globe due to the increasing number of ultra-wealthy individuals and families in those regions. Nowadays, family offices are set up all over the world. This fact inevitably leads to the question: Are there regional differences among the structures of family offices, their services, their investment strategies, and their operational costs?
Asset Poverty in India
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Swati Dutta, World Economics, September 2013
In order to formulate policy to target the correctly identified rural poor in India, focus on an income poverty measure alone is insufficient. The purpose of this research is to study a new area of poverty measurement based on data that detail a household’s access to basic assets. The study has used the secondary data source provided by the Demographic and Health Survey (DHS) for the time period of 1992, 1998 and 2005. In order to construct the asset index the technique of multiple correspondence analysis is used. A discussion of trends in asset poverty in various states in India follows, together with the policies they need to adopt depending on their state of poverty.
Poor Economic Statistics Fuel China’s Low Consumption Myth
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Jun Zhang & Tian Zhu, World Economics, June 2013
The generally held belief that China’s consumption is too low is a myth based on inadequate theory, a misreading of official statistics and the use of market exchange rates for making international comparisons. Chinese official statistics underestimate consumption expenditure on housing, they omit consumption paid for as benefits by the corporate sector, and there are a number of problems with the household expenditure surveys employed. An adjustment for statistical issues suggests that the rate of consumption is 60–65% of GDP, not the 48% based on the widely quoted official statistics figures, and is quite similar to the level experienced by other East Asian economies.
Going Beyond Averages
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M.G. Quibria, World Economics, March 2013
One of the persistent, unresolved controversies of economic development is the effectiveness of development assistance – whether foreign aid contributes to economic development. This article argues that this controversy is largely an artefact of a methodology that focuses on the ‘averages’ and pays inadequate attention to the specific characteristics of individual societies. For enhancing aid effectiveness, one needs to discard the one-size-fits-all approach, and adopt a more nuanced, tailor-made strategy based on a comprehensive understanding of specific countries.
Are National Accounts Revisions Harmful for Historical Comparisons?
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Dieter Brümmerhoff & Michael Grömling, World Economics, December 2012
Revisions of national accounts affect economic analysis, calling into question theoretical findings based on earlier data. Revisions to German national accounts have resulted in a markedly higher GDP in absolute terms and a lower volatility in macroeconomic production. According to the revised data, recessions have been less pronounced. Moreover, less volatility in production has changed income accounts and, above all, reduced the fluctuations in property and entrepreneurial income. The stylised fact of declining property and entrepreneurial incomes during recessions in West Germany from 1970 to 1991 has vanished into thin air as a result of the revisions of 2002 and 2006.
Demographic Change Across the Globe
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Marga Peeters & Loek Groot, World Economics, June 2012
This paper investigates the fiscal pressure, or the level of public expenditure on old and young economically inactive people, arising from demographic change in relation to the labour market space, or the proportion of the working age population not in full-time employment. The exercise is carried out for 50 countries that cover 75% of the world population. The pressure-to-space indicator ranks Poland, Turkey and Greece high, although, apart from Turkey and India, developing countries generally rank low due to low spending on the old (pensions, healthcare) and on the young (education, family costs). Peculiarly, economies with higher pressure have more space. The hypothesis that ageing economies have started using their labour market space in anticipation of higher demographic pressure is rejected. It is important to note that raising the retirement age in developed economies by five years alleviates fiscal pressure by almost 30% and creates 10% more labour market space.
Wealth and Population Data in Africa
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Brian Sturgess, World Economics, June 2012
There are very good grounds for challenging much of the conventionally accepted UN and World Bank economic data relating to both the absolute and relative per capita income of many African countries and to their growth rates over time. A recent paper by Morton Jerven published in World Economics demonstrated the unreliability of much if not most African GDP data and a new paper published in this issue by Deborah Potts challenges the accuracy of African population estimates"
How Many US Jobs Might be Offshorable?
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Alan S. Blinder, World Economics, June 2009
Using detailed information on the nature of work done in over 800 US Bureau of Labor Statistics occupational codes, this paper ranks those occupations according to how easy/hard it is to offshore the work – either physically or electronically. Using this ranking, it is estimated that somewhere between 22% and 29% of all US jobs are or will be potentially offshorable within a decade or two. (No estimate is made of how many jobs will actually be offshored.) Since the rankings are subjective, two alternatives are presented – one is entirely objective, the other is an independent subjective ranking. In general, they corroborate the rankings, albeit not perfectly. It is found that there is little or no correlation between an occupation’s ‘offshorability’ and the skill level of its workers (as measured either by educational attainment or wages). However, it appears that, controlling for education, the most highly offshorable occupations were already paying significantly lower wages in 2004.
The West and the Rest in the World Economy: 1000–2030
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Angus Maddison, World Economics, December 2008
This paper analyses the forces determining per capita income levels of nations over the past millennium and the prospects to 2030. In the year 1000 AD, Asian countries were in the lead. By 1820, per capita GDP in Western Europe and the US was twice the Asian average. The divergence had grown much bigger by 1950, but by the 1970s, several Asian countries – Japan, South Korea, Taiwan, Hong Kong and Singapore – had achieved considerable catch up. Since then, there has been a major surge in China and the beginning of a similar phenomenon in India. As a result, the Asian share of world income has risen steadily and, by 2030, will be fairly close to what it was in 1820. Maddison concludes by comparing his analysis with the Malthusian interpretation of Oded Galor.
Measuring China’s Economic Performance
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Andreas (Andy) Jobst & Harry X. Wu, World Economics, June 2008
China is the world’s fastest growing economy and is also the second largest. However, the official estimates of the Chinese National Bureau of Statistics exaggerate GDP growth and need adjustment to conform to international norms as set out in the 1993 System of National Accounts (SNA). This paper presents and discusses the necessary adjustments. The two major contributions are new volume indices for the industrial sector and for "non-material" services. Finally, in order to measure the level of Chinese GDP in internationally comparable terms, the authors use a measure of purchasing power parity (PPP) instead of the exchange rate.
Reply to Professor Zimmermann
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Giles Atkinson, World Economics, September 2000
Giles Atkinson replies to Professor Zimmermann’s "A Multi-coloured GDP -or No New GDP at All?"[World Economics, Vol 1 No 3 July-September 2000]
Poles Apart
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Paul Gregg, Kirstine Hansen & Jonathan Wadsworth, World Economics, June 2000
Analysis of labour market performance using individual level data can reach radically different conclusions to those provided by a household-based analysis, using the same source of information. In Britain and other OECD countries the number of households without access to earned income has grown despite rising employment rates. Built around a comparison of the actual jobless rate in households with that which would occur if work were randomly distributed, the authors show that work is becoming increasingly polarised in many countries. Changing household structure can only account for a minority of the rise in workless households, so that labour market failure is the dominant explanation. Polarisation of work will have important welfare and budgetary consequences for any country.
False Perspective: The UNDP View of the World
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David Henderson, World Economics, March 2000
Despite some searching and unanswered criticisms of its treatment of statistical evidence, the UNDP Human Development Report has become established as a widely-quoted and influential survey of the world scene. The 1999 Report, reviewed here, focuses on ‘globalization’. This is described as a dominant influence on the recent economic fortunes of developing countries in particular, and as a primary cause of continuing poverty and growing inequality in the world. The author argues that the Report provides neither argument nor evidence in support of this thesis; that it takes no account of other factors that have strongly influenced economic performance; that its main prescription for the world, of reforms in ‘global governance’, is largely beside the point; and that its whole approach is crudely anti-liberal. The author concludes by placing the Report, as also the economists who have aligned themselves with it, in the wider context of anti-liberalism today.


The Black Economy - Benefit frauds or tax evaders?
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Jim Thomas, World Economics, March 2000
One answer to the question "How Rich are We?" is to compare levels of National Income either across countries or for a single country over time. However, the relevance of this approach depends on how accurately National Income measures the output of goods and services of a country. While it is difficult to measure, the Black Economy represents the output of goods and services that is not generally captured in the National Income Accounts. This article discusses the problems of measuring the size of the Black Economy and speculates on the questions of who is involved and how. The relative importance of Tax Evasion versus Benefit Fraud is discussed.


Re-thinking Economic Progress
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Giles Atkinson, World Economics, March 2000
Most national governments have pledged a commitment to sustainable development. The transformation of these pledges into policy is a formidable challenge. Of particular interest are proposals for the construction of green alternatives to Gross Domestic Product (GDP), which it is hoped will provide policy-makers with a consistent and summary signal of "true" trends in the economy both now and into the future. This paper reviews the green accounting debate over the past decade. the author argues that, while initial expectations have, at times, been overstated, there are encouraging signs for policy-makers attempting to make sense of their commitments to sustainable development. One such indication is the increasing emphasis on improved measures of saving, providing a better link between actions in the present and their implications for the future.



Displaying: 1-19 of 19