From the Editor
John Silvia, Sam Bullard, and Huiwen Lai investigate probit analysis as a tool for predicting recessions. A problem with this approach is that due to data constraints, relatively few of a large number of plausible predictors can be used. Thus, the authors combine a judicious use of stepwise regression with probit analysis to search for robust predictors and generate reliable predictions.
Inventory fluctuations have accounted for a sizable portion of the changes in U.S. GDP during recessions over the past fifty years. To better understand and predict these fluctuations, Anthony Joseph, Maurice Larrain, and Eshwar Singh develop a model that depends on the divergence between actual and targeted sales as the primary cause of inventory imbalance. It also suggests slow adjustment of inventories to sales surprises and that money illusion maybe a pitfall to inventory management. It is generated by a combination of regression and neural network methodology and is tested by forecasting out-of-sample forecasts of manufacturing and trade inventories.
While other emerging market economies have benefited from globalization, African countries continue to be marginalized. Nigeria is one of two major African countries with strong potential to harness the opportunities and meet the challenges that the global economy provides. Temitope W. Oshikoya provides a perspective on Nigeria’s global economic position and integration into the world economy. Despite rapid growth in recent years, it is still among the world’s poorest countries. Oshikoya finds that further integration into the global economy and sustained growth require policy reforms, improved governance, and investment in social, human, and physical infrastructure.
John A. Tatom looks at possible sources of income inequality in the United States and then explores whether, in fact, workers are losing out relative to the wealthy and whether all real wages have been falling or perhaps only manufacturing wages. He also examines whether and how a “wealth gap” is growing and examines the hypothesis that relatively inexperienced or unskilled workers are falling behind.
In this issue’s Focus on Industries and Markets, Barbara Insel describes the complexities and challenges of the U.S. wine industry—an industry built on “agriculture and fashion, chemistry and passion, tradition and capital.” She also describes how economic analysis can contribute to making firms in this industry more effective.
In Focus on Statistics, Robert P. Parker, presents a guide to regional data from federal government agencies’ programs and publications, particularly emphasizing data that are available on the Web.
In Economics at Work, Alberto Gomez-Alcala, provides an account of the diverse clientele, multiple goals, and unique challenges of economists in a major Mexican bank.
In the Book Reviews, Jesse Hixon reviews The Undercover Economist by Tim Harford. This is one of several recent attempts to communicate economic concepts to laymen, largely from examples drawn from current public policy issues. It is likely to provide insights to professional economists on how to communicate with those who must make economic decisions without economics training. Also, Merrill Matthews reviews Who Killed Health Care?: America’s $2 Trillion Medical Problem—And the Consumer-Driven Cure by Regina Herzlinger, whom Matthews characterizes as, “one of the country’s most knowledgeable and articulate experts on the U.S. health care system.” Herzlinger is an advocate of a “small-is beautiful” approach that “trusts consumers, in consultation with their doctors, to make good decisions, especially when there is abundant information available.” This contrasts with the “big-is-beautiful” approach of highly centralized care. Matthews finds her arguments to be a convincing argument for the most efficient path to reforming a broken health care system.
Editorial Board Addition
I am pleased to announce that Douglas J. Lamdin has joined the Editorial Board . Doug is an associate professor at the University of Maryland, Baltimore County. He has broad interests in corporate planning, microeconomics, and public policy. His research interests and enthusiasm will make him a valuable contributor to Business Economics.
Robert Thomas Crow
rtcrow@comcast.net