Anari The Power of Profit

Business and Economic Analyses, Forecasting, and Stock Valuation
1. Auflage 2009
ISBN: 978-1-4419-0649-6
Verlag: Springer-Verlag
Format: PDF
Kopierschutz: Wasserzeichen (»Systemvoraussetzungen)

E-Book, Englisch, 180 Seiten

How can business leaders make better production and capital investment decisions? How can Wall Street analysts improve their predictions of future stock market values? How can government improve macroeconomic forecasts and policies? In The Power of Profit, Anari and Kolari demonstrate how profit measures can be applied as the basis for these and many other applications of economic, policy, financial, and business analysis. The underlying theme of the book is that profitability is the driving force in free market economies. Firms invest in capital, produce goods and services, and generate sales in an effort to reap profits. Firms that are unprofitable exit the marketplace and are replaced by profitable firms. Despite the crucial importance of profits, however, there is no formal model that directly relates profits to capital formation and output. Previous studies over the past 100 years on profit and the economy are mainly descriptive in nature, without any well-specified model grounded in microeconomic theory. Filling this gap, the authors present a profit system model of the firm grounded in basic accounting relationships in addition to the well-known Cobb-Douglas production function, which can be applied to individual firms, industries, and the business sector as a whole. Through rigorous data analysis, the authors show how the profit system modelcan be applied to: modeling the U.S. business sector and national economy forecasting output, capital stock, total profit, profit rates, and profit margins examining the relationships among profitability, economic growth, and the business cycle simulating the effects of potential monetary policy changes on the business sector and national economy valuing the Standard & Poor's stock market index as well as individual firms. The result is a model that integrates microeconomic and macroeconomic factors and that can be widely applied in business and economic decisions, policymaking, research, and teaching.

Dr. Ali Anari obtained his PhD in Industrial Economics and Business Studies at the University of Birmingham, United Kingdom in 1978. He has more than 30 years research experience in developing computer-based economic models for economic analysis and forecasting in the areas of energy economics, macroeconomics, real estate economics, and regional economics. In his professional career Dr. Anari has been a research economist in the areas of national and regional economic modeling at the Center for Business and Economic Analysis in the Mays Business School at Texas A&M University, Visiting Scholar in the Anderson School of Management of the University of California, Los Angeles, research economist at the Imperial College of Science and Technology, London, research fellow at the University of Birmingham, U.K., and economic analyst at the economics and statistics department of National Iranian Oil Company. He has presented papers on economic modeling at conferences around the world and published book chapters and articles in such scholarly publications as the Journal of Money, Credit, and Banking, Journal of Applied Economics, Journal of Financial Research, Journal of Real Estate Economics, Journal of Economics and Business, Journal of Energy Policy, and Journal of Emerging Markets.  Current research interests include developing economic models for early warning of real estate bubbles, profitability and economic growth, and regional profitability analysis.         Professor James W. Kolari obtained his PhD in Finance at Arizona State University in 1980 and thereafter has taught financial markets and institutions at Texas A&M University in the Finance Department.  In 1994 he was awarded the JP Morgan Chase Professorship in Finance in the Mays Business School.  Dr. Kolari has more than 30 years research experience in the areas of computer-based modeling of financial markets (including stock, bond, and real estate markets), financial institutions (such as banks and insurance companies), and financial regulation.  Over the years, he has been a Visiting Scholar at the Federal Reserve Bank of Chicago, Fulbright Scholar at the University of Helsinki and Bank of Finland, Faculty Fellow with the Mortgage Bankers Association of America, and Senior Research Fellow at the Swedish School of Business and Economics (Hanken) in Finland, in addition to being a consultant to the U.S. Small Business Administration, U.S. Information Agency, American Bankers Association, Independent Bankers Association of America, and numerous banks and other organizations.  He has published over 100 articles published in refereed journals, numerous other papers and monographs, and 12 co-authored books.  His papers have appeared in such domestic and international journals as the Journal of Finance, Journal of Business, Journal of Money, Credit and Banking, Journal of Economic Dynamics and Control, Journal of Banking and Finance, Real Estate Economics, Journal of International Money and Finance, and Scandanavian Journal of Economics.  Papers in Dutch, Finnish, Italian, Swedish, and Russian have appeared outside of the United States.  He is a co-author of leading college textbooks in commercial banking and international business courses.         

Autoren/Hrsg.

Anari, Ali

Inhaltsverzeichnis

1;The Power of Profit;1
2;Preface;5
3;Contents;6
4;1 The Role of Profit in Advanced Market Economies;10
5;2 Profit System Models of the Firm, Industry, and Business Sector;14
5.1;2.1 Theoretical Foundation of Profit System Models of the Firm;14
5.1.1;2.1.1 Mathematical Economic Approach to Obtaining a Profit System Model of Production;15
5.1.2;2.1.2 Accounting Approach to Obtaining a Profit System Model of Production;16
5.1.3;2.1.3 Profit System Model of Capital Stock;17
5.1.4;2.1.4 Profit System Model of Profit Margins;17
5.1.5;2.1.5 Profit System Model of Employment;18
5.1.6;2.1.6 Other Key Business Variables: Sales Tax, Depreciation, Total Employment Compensation, and Wage Rate;19
5.1.7;2.1.7 Profit System Channel of Inflation Transmission;19
5.1.8;2.1.8 Profit System Models of Deflated Output, Deflated Capital Stock, and Deflated Labor Productivity;20
5.1.9;2.1.9 Total Profit Equations;21
5.1.10;2.1.10 Profit System Economic Equilibrium;21
5.1.11;2.1.11 Profit System Theory of Economic Growth;22
5.1.12;2.1.12 Profit System Theory of Business Cycles;23
5.1.13;2.1.13 Financial Sector Variables: Interest Rate and Credit;24
5.2;2.2 Empirical Profit System Models in the Form of Dynamic Equations;24
5.2.1;2.2.1 General Approach;24
5.2.1.1;2.2.1.1 Profit System Models of the Goods and Services Market;26
5.2.1.2;2.2.1.2 Extended Profit System Model with Goods and Services Plus Labor Markets;31
5.3;2.3 Summary;33
5.4;2.4 Appendix: General Form of the Extended Profit System Model with Goods and Services Plus Labor Markets;35
6;3 A Macroeconomic Profit System Model of AdvancedMarket Economies;38
6.1;3.1 Macroeconomic Profit System Model;38
6.1.1;3.1.1 Business Sector Profit System Model;42
6.1.2;3.1.2 Nonprofit Sector Model;43
6.1.3;3.1.3 Combined Business Sector Profit System Model and Nonprofit Sector Model;44
6.1.4;3.1.4 The Monetary Policy Model;44
6.1.5;3.1.5 Debt Model;45
6.1.6;3.1.6 Macroeconomic Equilibrium;45
6.1.7;3.1.7 Channels of Inflation and Monetary Policy Transmission;46
6.1.8;3.1.8 Wicksell's Cumulative Process in the Macroeconomic Profit System Model;47
6.1.9;3.1.9 The Government Sector and Profitability;48
6.2;3.2 Application of the Macroeconomic Profit System Model to the US Economy;48
6.2.1;3.2.1 Data;49
6.2.2;3.2.2 Estimation of the Macroeconomic Model;53
6.2.3;3.2.3 Testing Model Reliability;60
6.2.3.1;3.2.3.1 Historical Simulation of the Estimated Macroeconomic Model;60
6.2.3.2;3.2.3.2 Out-of-Sample Forecasts of the Estimated Macroeconomic Model;66
6.3;3.3 Monetary Policy Analysis and the Impacts of Economic Stimulus Plans;70
6.3.1;3.3.1 Monetary Policy Analysis;70
6.3.2;3.3.2 Fiscal Policy Analysis;71
6.3.3;3.3.3 Macroeconomic Policy Analyses: A Scenario Approach;72
6.4;3.4 Business Cycle Analysis;78
6.5;3.5 Conclusion;86
7;4 Profit System Models of the Corporate Sector;90
7.1;4.1 Corporate Models;91
7.1.1;4.1.1 The Corporate Model;91
7.1.2;4.1.2 The Nonfinancial Corporate Model;93
7.2;4.2 Data for Estimating Corporate and Nonfinancial Corporate Sector Models;93
7.3;4.3 The Estimated Corporate Profit System Model;93
7.4;4.4 The Estimated Nonfinancial Corporate Sector Profit System Model;95
7.5;4.5 Stochastic Simulations of the Estimated Corporate Models;95
7.6;4.6 Out-of-Sample Forecasts of Corporate Profit System Models;98
7.7;4.7 A Quarterly Profit System Model of the Nonfinancial Corporate Sector;100
7.8;4.8 Conclusion;101
7.9;4.9 Appendix: Estimated Nonfinancial Corporate Profit System Model Using Quarterly Data Series: 1958Q12008Q4;102
8;5 Profit System Models for Industries;104
8.1;5.1 The Empirical Representation of the Model for Industries;104
8.2;5.2 Industry Data;106
8.3;5.3 Empirical Results;106
8.3.1;5.3.1 Mining, Quarrying, and Oil and Gas Extraction (NAICS 21);108
8.3.2;5.3.2 Utilities Industry (NAICS 22);109
8.3.3;5.3.3 Construction Industry (NAICS 23);110
8.3.4;5.3.4 Manufacturing Industry (NAICS 31--33);112
8.3.5;5.3.5 Wholesale Trade Industry (NAICS 42);113
8.3.6;5.3.6 Retail Trade Industry (NAICS 44--45);115
8.3.7;5.3.7 Transportation and Warehousing Industry (NAICS 48--49);116
8.3.8;5.3.8 Information Industry (NAICS 51);118
8.3.9;5.3.9 Finance and Insurance Industry (NAICS 52);119
8.3.10;5.3.10 Professional and Business Services Industry (NAICS 54--56);121
8.3.11;5.3.11 Education and Health Services Industry (NAICS 61--62);122
8.3.12;5.3.12 Leisure and Hospitality Services Industry (NAICS 71--72);124
8.4;5.4 Conclusion;125
9;6 A Profit System Model of Stock Market Valuation;127
9.1;6.1 A Profit System Model of the Standard and Poors Industrial Index;127
9.1.1;6.1.1 Stock Market Price Indexes;128
9.1.2;6.1.2 Data for Standard and Poor Industrial Index Firms;130
9.1.3;6.1.3 A Profit System Model for Stock Market Index Valuation;130
9.1.4;6.1.4 Estimated Profit System Model for the S&P Industrial Index Firms;132
9.1.5;6.1.5 Estimating S'P's Industrial Index of the Stock Market;133
9.2;6.2 Stock Market Capitalization;138
9.3;6.3 Conclusion;142
9.4;6.4 Table 6.1A: Firms in the Standard and Poors Industrial Index: Dollar Values Per Share Data for Fundamental Variables;143
10;7 A Profit System Model of the Firm for Business Analysisand Stock Valuation;144
10.1;7.1 Application of the Profit System Model to Firms;144
10.1.1;7.1.1 Empirical Model;144
10.1.2;7.1.2 Data Issues;146
10.2;7.2 Empirical Results for Two US Corporations;147
10.2.1;7.2.1 Data for Firms;148
10.2.2;7.2.2 Empirical Results for International Business Machines Corporation;148
10.2.3;7.2.3 Empirical Results for Johnson & Johnson;154
10.3;7.3 Further Discussion;158
10.3.1;7.3.1 Strategic Business Planning;159
10.3.2;7.3.2 Budgetary Control;159
10.3.3;7.3.3 Capital Budgeting Decisions;160
10.4;7.4 Conclusion;160
11;8 Concluding Remarks;162
12;References;165
13;About the Authors;174
14;Author Index;175
15;Subject Index;178