[OPE-L:5549] Re: Humbug Aggregate Price-Value Correlations

Duncan K. Foley (dkf2@columbia.edu)
Mon, 29 Sep 1997 14:12:08 -0700 (PDT)

[ show plain text ]

Some comments on Lefteri's OPE-L:5547:

>
> Returning now to Klimans suggestion for the shift share
>analysis, I am not sure it differs qualitatively from the other indexes.
>It seems to me, intuitively (I must admit though that I haven't done any
>particular research) that appart from the extreme values of 0 and
>1 suffers from the same limitations of the other indexes, and also
>(at first sight) does not have any clear economic meaning.

I think that any quantitative result has to be put in the context of a
question that it's supposed to answer. One problem I have with the
value/price correlation literature is that this questions remains a bit
obscure. But a number of the metrics of correlation are purely statistical,
and it seems to me that metrics that introduce meaningful economic
quantities, like shift-share, are inherently more interesting that purely
statistical or mathematical concepts of distance or correlation.

..

> - My joint (with Th. Maniatis) paper that I mentioned
>above, uses the vertically integrated value composition of capital

If what's at issue is the role of the equalization of profit rates through
competition, then don't you have to have some measure of turnover of
capital as well, so as to transform the flow of capital outlays into a
stock of capital tied up?

Cheers,
Duncan

Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
(212)-854-3790
fax: (212)-854-8947
e-mail: dkf2@columbia.edu