The president’s economy: a response to Campbell

Professor Campbell performed a signal service by pointing out that analyses of economic performance under Republican and Democratic presidents must control for the ups and downs of the business cycle that are beyond a president’s control. He correctly noted in particular that Republican and Democratic presidents of the postwar era took office under very different economic conditions. We strongly concurred with these contentions.

Unfortunately, Campbell rejects all means of controlling for those ups and downs that do not involve the use of a dependent variable lagged one or two quarters-a flawed practice for two reasons. The first flaw is that ifa variable and its lagged value are closely related, one runs the risk of controlling for the dependent variable itself. The second difficulty is that controlling for the dependent variable lagged one quarter controls by extension for the factors that determined that dependent variable up to just three months ago. For these reasons, “lagged dependent variables can suppress the explanatory power of other independent variables”.

Campbell seeks to avoid the first of these dangers by claiming that economic variables and their lagged values are related to one another but not really related. On the one hand, Campbell writes-correctly-that “economic conditions are not neatly packaged into quarters. Since the economy is continuously in motion, the condition of the economy at time t should be expected to have an effect on the economy at time t+l” . Yet Campbell also maintains that economic conditions in adjoining quarters are really not all that related “since the lagged measure is arrived at independently and is of economic activity over a nonoverlapping and significantly long period of time”.

Campbell cannot have it both ways. As we noted previously, the fact is that economic conditions in quarters t and t + l are not independent of each other (Comiskey and Marsh 2012, 45). If they were, then by the terms of his own argument Campbell would have no need to control for conditions in the preceding quarter. Campbell seeks to escape this dilemma by claiming that “the dependent economic variable and the lagged economy … are analytically independent of each other, but they are empirically related to one another”. This distinction strikes us as fanciful. They are analytically related for the reasons Campbell explains so well, and his statistical results demonstrate that they are also empirically related.

The second way a lagged dependent variable “can suppress the explanatory power of other independent variables” (Achen 2001, 1) is that the lagged variable controls for the factors that made the dependent variable what it was in period t-1-the same factors that are impacting it in period t. In our case, one of those factors is the party of the president.

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Posted by admin – December 6, 2012 at 4:54 pm

Categories: Business   Tags: , ,

What Makes A Successful Woman?

Janet Harper has been a very busy lady. Here she reveals some of her life story and how going through several life stages and coming out at the other end intact can help you to be successful.
“I grew up in a very, very loving home; I had the warmest, most loving mother and dad. I grew up being told by my parents every day that I was a wonderful, worthwhile person. I think I grew up with a lot of warm feelings for people in general. I also had a strong daddy who felt that women should be taken care of. So I grew up with kind of a `dumb act,’ too, because I knew that if I played helpless, somebody else would take care of me. I went from a father who took care of everything to a husband who took care of everything.”
She did not contemplate a career: “In my home, as I grew up, there were only a couple of things that my father thought it was appropriate for a young lady to do. One was to teach school, and the other was to stay home. My daughters have all kinds of ideas of what they want to do with their lives; I didn’t. I was a junior in college; I didn’t have a major, and my parents made me take education courses. They said, `You might want to teach some day.’ I didn’t plan to.”
But then Harper’ life took some turns that few women who grew up in Arkansas in the 1940s and 1950s were prepared for. First, she went through a divorce that left her, when she was in her mid-30s, with two young children to support. Then, in 1974, she took her first real job, selling for a Little Rock real-estate agency. By the time that agency broke up, 5 1/2 years later, Harper was selling more than $5 million worth of residential property a year.
She started her own agency, the Janet Harper Company, in 1980. Now it is one of the strongest agencies in Little Rock’s most prestigious neighborhoods, with sales that Harper expects to reach $30 million this year. That is an impressive figure for Little Rock, where the median sales price for an existing home in the past 12 months was only $75,000 (far below the $180,000 or more in New York, Boston and parts of California).
After her divorce, Harper started thinking about pursuing a career. “I was growing, gaining some confidence and ready to step out, whereas I hadn’t been a few years earlier. I’d taken about as much advice about marriage as I could take at that stage so I was ready to move on. I was at a party, and this cute girl said to me: `Oh, you ought to come sell real estate. We’re all having so much fun. We don’t work very hard, and we make lots of money.’ I thought, gosh, maybe I could do that, too.”
Once Harper went to work in real estate, it turned out that her upbringing had masked a fierce drive to succeed. “People used to call me a workaholic,” she says. “Sometimes some of the people who worked with me would say, `How come you have all these prospects, and I don’t?’ I would say, `I choose to work, and you choose to play tennis.’ I had an insatiable appetite to call all the people and sell all the houses and stir up all the business.
“For instance, a new house would come on the market, and it would be 5:30, and everybody else would go home, and I’d say, `Ah! A new house! And I’d start looking through my book for who’d want this new house, and I’d call them all. Everybody else would get to the office the next morning, to get ready to start calling their people, and I’d already sold the house.”
For her, she says, being raised as a typical Southern girl made it easier, not more difficult, to succeed in business: “I spent all my life wanting people to like me, and wanting to be nice to people so they would like me. That translated really well into a commission-sales business.”
In residential real estate, “you’re helping people in a very important, intense time in their lives,” Harper says. It can be “a very happy time-it may be a marriage, a new baby, a promotion, a new job, moving up or finally fulfilling a dream they’ve always had to have a certain type of home for their family. On the other hand, it may be a sad time, when someone has died, or it may be a divorce, a lost job or bankruptcy. There are very few of these situations that don’t have a lot of emotion in them, one way or another. I enjoy that. I enjoy having a slice of people’s lives.”
Harper now has 20 agents. Competing agencies have many more, but Harper has about as many as she wants because, she says, “I want to feel that a potential buyer or seller gets the same kind of quality, caring service from us no matter what agent [that client] gets.” She adds, I think if we get a lot bigger, I’m not going to have as much awareness of what these agents are doing.”
Her more predictable life now is a change from the days when “I had stirred up so much business, my phone rang off the wall. I couldn’t eat a meal, I couldn’t go to sleep, I couldn’t sleep in the morning, because I had called so many people and had listed so many homes for sale.
“I had to be able to jump and run.”
Running out to meet a client was harder when her daughters were younger, she says, but “my children were very supportive; they would go with me. I used to take them to school, and they’d get out of the car and say, `Sell a house today, Mom! And when I’d pick them up, they’d say, `Did you sell a house?’ I’d let them put the `sold’ stickers on our houses. It still makes me sad some days, because they tell me that I’d call and say I’d be home in 30 minutes, and they would laugh, because they knew that meant an hour and a half.
“As they got older, a lot of times they said to me, `You’ve been a role model for us that is closer to the world that we’re going to live in.’ I think they’ve been proud of what I’ve done.”

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Posted by admin – November 27, 2012 at 3:15 am

Categories: Business   Tags: , ,

Key Person Insurance

Key Person Insurance is a policy taken out to cover the company in the event of the business losing their key person due to death or critical illness. Many companies have key people within them that are integral to the running of the business and of course the profits. Many companies when they lose a key person will go bankrupt or certainly lose a huge amount of income. While directors and company owners are happy to insure their machinery and company cars people will often forget about insuring the key people within the business. a key person insurance policy is much like a life & critical illness insurance with a few small differences. With a personal life insurance the life assured owns the policy and any payment from a claim will be paid to the life assured or follow the instructions within the will. With a key person business protection a policy will pay out to the company. Payment of premiums is made by the company and can be tax deductible.

Business protection policies are set up either in trust or in ownership of the company. The premiums are still based on the age, sex and smoker status of the life assured. Of course prices will also depend on the amount of cover, term of the policy and underwriting outcomes. All policies are fully underwritten up front and will often require a medical and a copy of the GP report.

Other types of business protection will include shareholder cover and partnership insurance. These are slightly different in that the policy is to cover the amount of shares each person owns. Shareholder protection will normally be set up with a cross shareholder agreement or option agreement. It’s important not to confuse key person insurance with indemnity or PMI insurance which is completely different and you can find more information on PMI insurance here. Read more…

Posted by admin – October 30, 2012 at 1:07 am

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