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SmartEconomist Weekly - Apr. 5, 2006
Reports on Cutting-Edge Research in Business, Finance & Economics

This week it's brought to you by IAOC
The International Association of Online Communicators
http://www.onlinecommunicators.org
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In This Issue:

   Report 141
   HOW FINANCIAL MARKETS REACT TO SHOCKS

   Report 140
   WHAT IF BROADBAND WERE TAXED?

   Smart Interviews - Q&A 1
   PROF. CHINN ON THE U.S. TRADE DEFICIT

   Silly Economist
   POOR SWISS
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Report 141
HOW FINANCIAL MARKETS REACT TO SHOCKS

A general lack of trust in financial markets' ability to absorb new information as it becomes available is widespread among investors and academics. Do stock prices reflect all available information about an asset's future value? Are markets able to adequately evaluate information? More specifically, if a shock hits the economy, how quickly do financial markets react?

(Report on "Updating Expectations: An Analysis of Post-9/11 Returns", a Working Paper by Jarl Kallberg, Crocker H. Liu and Paolo Pasquariello)

Read the full report (after logging in) at:
http://www.smarteconomist.com/insightnews/141
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Report 140
WHAT IF BROADBAND WERE TAXED?

In the US, the 1998 Internet Tax Freedom Act forbids states from charging sales tax on Internet access. Various commentators opposed this ban and emphasized the opportunity it represents of raising large tax revenue. How would consumers and firms react to a similar tax? Would it slow down the adoption of broadband? Would tax revenue be larger? The paper also presents the more general implications of taxation for the diffusion of new technologies.

(Report on "The Value of Broadband and the Deadweight Loss of Taxing New Technology", a Working Paper by Austan Goolsbee)

Read the full report (after logging in) at:
http://www.smarteconomist.com/insightnews/140
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Smart Interviews - Q&A 1
PROF. CHINN ON THE U.S. TRADE DEFICIT

Menzie D. Chinn, Professor of Public Affairs and Economics at LaFollette School, University of Wisconsin, Madison, answers readers' questions on the economic consequences of the US trade deficit, on its likely future evolution, on how the dollar will behave in the long-term, on the political aspects of the trade deficit, and on how European and Asian countries will deal with it.

Read the Q&A at:
http://www.smarteconomist.com/interview/1
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Next Q&A: Prof. Andrew B. Bernard will answer readers' questions on "Firms and Globalization".

You may submit your question at:
http://www.smarteconomist.com/interview/2
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Silly Economist
POOR SWISS

News: "Fortune 500", an annual ranking of America's largest corporations, has just been published for the fiscal year 2005. Exxon Mobil, an oil company, is No. 1 in both revenue (nearly $340 billion) and profits (over $36 billion).

Comment: How big is big? We took the ten largest companies in terms of profits and estimated their total payroll. We then summed up their entire profits and payroll, obtaining a rough measure of their value added: $276 billion. In 2005, Switzerland's GDP, calculated at purchasing power parity, amounted to $257 billion. In other words, last year ten US companies created more wealth than Switzerland as a whole... let's hope the comparison won't dent Swiss pride.

Read the past Silly Economist news and comments at:
http://www.smarteconomist.com/sillyeconomist
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