From The Editor

This issue, as is most often the case, covers a wide range of the different aspects of the complex world faced by those who use economics in business. In particular, it starts with the winning papers of this year’s contributed paper contest. While it does not take an economist to know that pocketbook issues are major factors in selecting a U.S. president, econometricians can contribute to knowledge of the importance of such factors. A problem, however, is that since elections come only once every four years, straightforward time-series analysis is caught in a dilemma of too few observations on recent elections versus structural change if many elections are included. Finessing this dilemma is one of the objectives of this year’s Mennis Award paper, in which Patrick L. Anderson and Ilhan Kubilay Geckil explore the use of pooled cross-section and time-series across states and elections, as well as a more traditional time-series approach to forecasting electoral outcomes.

Notwithstanding the importance of public policy for economic well-being, there are important structural issues over which public policy has little influence. One of these is the impact of demographic change on the labor force. In the paper that won this year’s NABE Award, Bruce D. Phillips analyzes the factors that will impact the labor force available to small business over the next decade as baby-boomers retire. Small business has both advantages and disadvantages in attracting workers in a labor force whose composition is likely to shift significantly.

As globalization proceeds with the force of a glacier and the speed of an airplane, it is accompanied by complexity that grows exponentially. Nowhere is this more the case than international corporate taxation. Charles E. McLure, Jr. analyzes the issues facing the European Community as it struggles to harmonize its members’ disparate tax systems, an issue of importance to all who have established businesses there.

Monitoring current economic conditions is an important function in many businesses, and unemployment is one of the most widely-used indicators. William C. Dunkelberg, Jonathan A. Scott, and William J. Dennis, Jr. find that data from the National Federation of Independent Business’ surveys on plans and expectations of small business can serve as an accurate and timely predictor of national unemployment rates. Their analysis also sheds light on the slow recovery of employment from the 2001 recession.

A great deal of ink has been shed over China’s role in the world economy and its impact on U.S. business. While China’s rapid growth is unquestioned, however, it is not clear that this growth can be sustained over the long run. One of the potentially binding constraints is macroeconomic growth outstripping the growth of China’s labor force. Cliff Waldman explores the degree to which China will retain its competitive edge in skilled, semi-skilled, and unskilled labor costs.

In Focus on Statistics, Robert P. Parker describes recent efforts to reconcile statistics on the U.S. BEA’s GDP-by-industry accounts and its input-output accounts, minimizing inconsistencies between them and making them available on a more timely basis. In Economics at Work, Howard L. Roth describes the forecasting, analysis, and other work performed by the economics unit in the State of California’s Department of Finance.

Looking for a bit of light—but edifying—reading? You might try The Blue Chip Murders: A Business Mystery, reviewed in this issue. It provides education in corporate finance as well as entertainment. Also reviewed is The Economic Approach to Law, a comprehensive and comprehensible account of the analysis of the law seen through the lens of economic analysis.

New Members of the Editorial Board

Robert A. Eisenbeis, Thomas F. Davis, and J. Paul Horne have agreed to join Business Economics’ Editorial Board. Bob Eisenbeis is the Director of Research of the Federal Reserve Bank of Atlanta and a past member of NABE’s board of directors. Tom Davis is a Corporate Vice President and the Chief Economist of Motorola, Inc. and a past president of NABE. Paul Horne is an independent market economist who divides his time between the U.S. and Europe since retiring as a Managing Director and European Equity Market Economist of Salomon Smith Barney in London. Their varied experience enhances the depth and breadth of the Editorial Board, and I am pleased to have them join us.

Robert Thomas Crow
rtcrow@comcast.net

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