From the editor

Business Economics, April, 2005 by Robert Thomas Crow

This issue of Business Economics illustrates the diversity of concerns of business economists and others who use economics in business. Some of the articles address important current topics that are likely to be important for some time to come. Others address ways of analyzing economic problems that are important to business. The subject matter encompasses international trade, local telecommunications competition and regulation, housing markets, forecasting interest rates, anti-trust policy, the construction industry and its data sources, and integrating the U.S. macroeconomic accounts with each other and with international standards.

The topical articles all engage in one of economists' favorite pastimes: assaulting conventional wisdom. The first article, by Ted H. Chu, addresses whether the Chinese renminbi is, as often alleged, overvalued relative to the U.S. dollar. Chu makes the case that it is not and that the U.S. trade deficit with China has more to do with U.S. macroeconomics than with China. The second, by Christopher Swann and David G. Loomis, raises the questions of how much competition there is in local telecommunications markets and whether current regulation is appropriate. Their empirical results suggest that there is substantial competition in many telecommunications markets and that regulation should be updated to reflect this emerging reality. The third, by James H. Smith, asserts that there is no housing bubble in the United States. He supports this assertion with an analysis of the major factors that determine residential real estate markets, such as demographics, affordability, and homeowner indebtedness. Since all are found to be in healthy ranges, Smith concludes that a healthy market for housing is likely to persist for some time to come.

Turning to methods, Hamid Baghestani, revisits a topic that has received much attention but for which the last word is still far in the future: forecasting interest rates. He finds that by employing survey forecasts on related variables other than interest rates, he is able to improve the accuracy of interest rate forecasts. Moreover, his general approach may be of value for enhancing the value of many variables forecast by surveys. Hossein Askari, John Forrer, Jiawen Yang, and Tarek Hachem present a method for determining the economic impact of trade sanctions imposed by the United States on target countries. Since such sanctions usually have harmful effects on U.S. business as well as the targets, the method developed by Askari, et al. will help to focus sanctions more clearly and make them more cost-effective.

In this issue's Focus on Statistics, Robert Parker assesses the efforts by the Bureau of Economic Analysis and the Federal Reserve Board to make U.S. national economic accounts consistent with the international guidelines developed under the auspices of the United Nations. The end result of these efforts, which have already accomplished a great deal, will be improve the quality and of U.S. accounts and make them more consistent with international practice. In Focus on Industries and Markets, Kenneth D. Simonson describes the state of the U.S. construction industry and the quality and availability of important construction statistics.

Since the Sherman Act (1890) and Clayton Act (1910), six commissions have been convened to review the state of anti-trust legislation and recommend changes consistent with the contemporary economy. The sixth is under way now. Thomas Hemphill, in Forum on Emerging Issues, describes the commission and its responsibilities and discusses the topics that it is addressing.

In the Book Reviews, Robert F. Graboyes reviews Goodman, Musgrave, and Herrick, Lives at Risk, a critical analysis of single-payer health insurance systems as they have been deployed in a number of countries. Edmund A. Mennis reviews Yamarone, A Trader's Guide to Key Economic Indicators, a description and assessment of data available to support short-run securities trading decisions.

Editorial Board

Wray O. Candilis has retired from the Editorial Board. Wray has contributed his services for many years, and I would like to express my appreciation and, on behalf of all readers of Business Economics, wish him well in his retirement.

Robert Thomas Crow

rtcrow@comcast.net