From The Editor
The recipient of NABE’s annual Adam Smith Award is selected by NABE’s president. The award is “based upon leadership in the profession and the use of ideas and knowledge in the workplace and policy arena.” In 2004, the award went to Lawrence R. Klein, and his address to NABE’s 46th Annual Meeting opens this issue of Business Economics. It is particularly gratifying to me to present this address in Business Economics because, some four decades ago, his introductory graduate class in econometrics at the University of Pennsylvania and his patient and inspiring guidance as my Ph.D. dissertation advisor set the direction for my own professional career.
His address is printed here in two parts. The first is fairly general, covering the history of NABE, the continued relevance of Adam Smith, and an overview of current challenges in constructing and using forecasting models of national economies. The second part, written with Wendy Mak, is an exposition of the development of a forecasting model for China. It illustrates one of his current areas of interest—the use of high-frequency data, particularly in those countries that do not have long time series.
For the first time since 1999, this issue presents a NABE presidential address that focuses on NABE itself. Drawing upon such addresses since 1977 and his own reflections, Duncan Meldrum traces the evolution of NABE from the type of association it was at its inception to the type of association it has become and to its likely future.
At the Annual Meeting, we were also privileged to hear an address by Jean-Claude Trichet, the president of the European Central Bank (ECB). In his paper in this issue, M. Trichet describes how the ECB copes with monetary policy in conditions of uncertainty, volatility, and structural change of the European Union. He emphasizes the conditions for the ECB’s success and notes the similarities and differences between the frameworks and policies of the ECB and the U.S. Federal Reserve System.
Gary E. Clayton’s article considers U.S. federal deficits/debt and concludes that looking at them as a percentage of GDP obscures the danger that they pose, given the risks of a rise in interest rates. The debt could quickly rise as percentage of the U.S. federal budget as well as in absolute terms and crowd out other federal expenditures as well as private capital formation.
Jane S. Shaw presents the case that business’s environmental record is much better than is generally recognized and that its role in environmental problems is often misrepresented. In fact, contends Shaw, environmental quality is better than it has been in the past, partly because of responsible stewardship and partly because environmentally responsive behavior often makes a positive bottom-line contribution.
In Forum on Emerging Issues, Francis H. Schott—a former president of NABE—looks at the ongoing discussion of inflation targeting and whether it is appropriate for the United States. While inflation targeting is unlikely, in Schott’s opinion, to be adopted while Alan Greenspan is the Chairman of the Fed, it could gain more traction in the future, depending on Greenspan’s successor.
In Focus on Industries and Markets, Michael A. Deneen and Andrew C. Gross look at the global market for water treatment products. In Book Reviews, Edmund A. Mennis discusses Bernard Baumohl’s The Secrets of Economics Indicators, a guide to which ones are most important, how they are used, and how they are compiled. Harvey Rosenblum, past president of NABE, reviews Corporate Scandals: the Many Faces of Greed, a description of the history of corporate scandals to the present and an analysis of actual and potential ways of preventing such scandals in the future, including the recent Sarbanes-Oxley Act.
Robert Thomas Crow
rtcrow@comcast.net