Beta adjustment methods

This study is an analysis of the forecasting ability of adjusted and unadjusted betas. Based on the Canadian data for 252 stocks, random errors in betas are the most important reason for the poor predictive ability of individual security betas. Most of this random error is eliminated if securities are grouped into portfolios. However, further improvements in forecasting ability are gained by adjusting the security betas for bias and inefficiency. Five methods of adjusting the naive beta estimates have been tried, including two methods not tested before. These two, Vasicek's two-stage method and order-bias adjustment method, gave results generally superior to others.     

The influence of foreign factor prices and international taxation on fixed investment in the UK

This paper examines the influence of foreign factor prices andinternational corporate taxation on fixed investment in theUK manufacturing sector. The evidence suggests that factor pricesaffect fixed investment in the UK through their influence oninternational competitiveness rather than the factor mix decision.There also appears to be a significant effect of tax competitivenesson the rate of investment. Empirical evidence suggests thatpolicy to increase investment be aimed at reducing the averagerate rather than the marginal rate of corporation tax.     

Public policy and the quality of life: How relevant is economics? Public policy and the quality of life: Market incentives versus government planning Randall G. Holcombe greenwood press, 1995, 190 pp.

This article summarizes and critiques Holcombe's arguments on the influence of private ownership and markets on the quality of life. Holcombe summarizes the free market-oriented literature and provides interesting anecdotes in arguing that markets are superior to public policies and more cost-effective in pursuing social goals such as health care, environmental protection, and housing. This critique argues that Holcombe's approach is much too narrow in that it reduces the quality of life to commercial value, cost minimization, and property rights. Economic analysis can become more relevant to the public discourse by recognizing that social values are broader than cost minimization and efficiency. Public sensibilities on equity, justice, equal opportunity, and human dignity shape the sociocultural context for evaluating the impact of public policy on the quality of life. Ideas are offered for enhancing the relevance of economics to policy discussions on the quality of life.