Latest Book
The Economics
of the
Stock Market.
Andrew Smithers
The current consensus model for the economy is invalid, being based on aprioristic assumptions which are shown to be invalid when tested against the data. It assumes that managements and shareholders seek to maximise the present value of their companies’ net worth. In fact they respond to the stock market’s assessment of their value.
By basing economics on actual behaviour, rather than on that usually assumed by economists, the Stock Market Model differs sharply from the current consensus. By including finance, it avoids a major weakness in current theory and, being robust when tested against the data, it should be preferred to it.
Print length: 224 pages
Publisher: OUP Oxford
Publication date: 22 Mar. 2022
Latest Articles
Latest
Interesting Times
We Live in Interesting Times. The Stock Market’s Response to Changes in Commercial Banks’ Reserves. Recent Experience. The US stock market has moved since mid-2020 with changes in the level of commercial banks’ reserves with the Federal Reserve, as Chart...
How Economic Theory Went Wrong
American Affairs • Spring 2024 The full article is available here. american_affairs_article_spring2024Download
Improving Economic Policy
World Economics • Vol. 24 • No. 2 • April–June 2023 Key Points The consensus model (CM) holds that there is only one equilibrium that needs to be maintained for economic stability. This follows, as a matter of logical necessity, from the model's fundamental...
Economic Management in a multiple Equilibria Economy PIDE Webinar
Economic Management in a multiple Equilibria Economy Pakistan Institute of Development Economics (PIDE) hosted a webinar on the topic withSpeaker: Andrew Smithers, Founder Smithers & Co, Author. Moderator: Dr. nadeem Ul Haque (Vice Chancellor - PIDE)
Extending the liabilities’ time horizon is key to pensions reform
From Andrew Smithers, London W8Published in the FT 14 June, 2023 Martin Wolf is correct when he writes that “reforming the failing pensions system is a priority” for the UK (Opinion, June 12). The essential change is to the economic theory used. To achieve the full...
Zombie Companies, Low Investment and Low Interest Rates
World Economics • Vol. 23 • No. 4 • October–December 2022 Key Points The number of zombies has risen this century and growth has slowed. Both have a common cause in the bonus culture but, unlike Japan after 1990, there is no direct causal link. Ultra-low interest...
About the Author
Andrew Smithers
Andrew is the author of multiple books on financial economics including “Valuing Wall Street”, “Productivity and the Bonus Culture” and “The Economics of the Stock Market”. He founded the economics consultancy Smithers & Co.
Contact: info@smithers.co.uk