AT least since Mandeville's Fable of the Bees (I728), there have been underconsumptionists who have ascribed trade depressions to deficiency in consumption expenditures.' Underconsumptionist thought may further be subdivided into two schools. Monetary underconsumptionism, which does not concern us here, blames underconsumption upon flaws in the processes of creation and circulation of money and credit. Social Credit movement in Great Britain and the Greenback movement in the United States may serve as illustrations. Since Marx and Rodbertus, however, the deficiency of consumption expenditures (and purchasing power) has been ascribed more commonly to maldistribution of real income. This we shall call maldistributionist or real underconsumption. During prosperity, income is concentrated in the higher brackets, where a large fraction is saved. If the savings are hoarded, there arises an immediate deficiency in consumption. If the savings are invested, the deficiency is only postponed until the day when additional consumption goods are produced because of the new investment, and come on to market without additional purchasing power to absorb them. Such, in briefest outline, is the position of the late John A. Hobson, the leading English-language representative of real underconsumptionism in the twentieth century.2 In this view, the principal means to prevent and to remedy depressions is substantial redistribution of income in the direction of greater eaualitv. In addition to Rodbertus, Marx, Hobson, and other leaders of the economic underworld, Keynes has given this position an indirect accolade in the General Theory,3 and it has been adopted by a substantial fraction of the neo-Keynesian school. Virtually all of the discussion, however, has been carried on in a quantitative semi-vacuum, which is to say, without any precise ideas as to the quantitative importance of possible income redistributions. It was of course recognized from the outset that personal savings rise faster than personal income, or in current jargon, that individuals' average propensities to save rise with their incomes. What was not recognized, however, was that for redistribution problems the relative marginal propensities to save of different income classes were likewise important, since redistribution involves shifts between income classes at the margin. To cite an extreme case, if all individuals' marginal propensities to save were identical, equalization of incomes would have no effect whatever on aggregate consumption and saving, however great might be the disparities in average propensities between rich and poor.4 Keynes himself, it would appear, was guilty of some inconsistency on this subject. He considered his consumption function relatively stable (which presumably means stable with respect to changes in income distribution), and at the same time he advocated income equalization in the interest of increased aggregate consumption. One of the first studies to apply modern aggregative analysis in estimating the quantitative effect of income redistribution on aggregate consumption was carried out by Harold Lubell at the Board of Governors of the Federal Reserve System.5 His study, which has been un* This study was financed by a grant from the Social Science Research Committee of the University of Wisconsin. 1 Harry G. Johnson cites the French Physiocrat Boisguillebert a century earlier as maintaining that trade would be more active if taxation fell on the rich than if it fell on the poor, which comes closer than Mandeville to a maldistributionist position. The Macro-Economics of Income Redistribution, in Alan T. Peacock (ed.), Income Redistribution and Social Policy (London, I954), p. I9. 2 For a full presentation of Hobson's views, see Erwin E. Nemmers, Hobson and Underconsumption (unpublished Ph.D. dissertation, Wisconsin, I953). We have called Hobson a twentieth-century writer, :but the initial presentations of his views appeared before the turn of the century. 'Keynes, General Theory, pp. 369-74. ' average propensities are important in this case only if ioo per cent of one individual's income is being taken away, or in a case where income is being given to individuals who had none before. 5 Harold Lubell, Effects of Income Redistribution on Consumers' Expenditures, American Economic Review, xxxvii (March 1947), 157-70, corrected in part, ibid., xxxvii (December 1947), 930. Lubell results appear to have furnished statistical

Abstract The bookkeeping procedures have been described as an information process of data collection, classification, tabulation, summarization, and presentation. The accounting classification and measurement function tends to be overlooked due to the clerical work involved in it. The financial state of the firm is continuously changing, of course, because of the occurrence of economic events. It is the accountant's function to recognize their effect on the financial state. A general accounting process may be described as a means of achieving the decision-making end of an accounting information user. This paper centers on the first part of the process-the information formation process, a process by which the accounting classification and measurement function determines the effect of an economic event on a firm's financial state. A communication channel model is used to describe the accounting classification function as the link between the various economic events of a firm and its financial state. The accounting channel of classification may be deterministic, lossless, or noisy as defined in information theory.

Abstract. Option market activity increases by more than 10 percent in the four days before quarterly earnings announcements. We show that the direction of this preannouncement trading foreshadows subsequent earnings news. Specifically, we find option traders initiate a greater proportion of long (short) positions immediately before “good” (“bad”) earnings news. Midquote returns to active‐side option trades are positive during nonannouncement periods and are significantly higher immediately prior to earnings announcements. Bid‐ask spreads for options widen during the announcement period, but traders do not gravitate toward high delta contracts. Collectively, the evidence shows option traders participate generally in price discovery (the incorporation of private information in price), and more specifically in the dissemination of earnings news.

[For a sample of NYSE firms, we show that wide spreads are accompanied by low depths, and that spreads widen and depths fall in response to higher volume. Spreads widen and depths fall in anticipation of earnings announcements; these effects are more pronounced for announcements with larger subsequent price changes. Spreads are also wider following earnings announcements, but this effect dissipates quickly after controlling for volume. Collectively, our results suggest liquidity providers are sensitive to changes in information asymmetry risk and use both spreads and depths to actively manage this risk.]

Most OECD economies, including that of Canada, experienced a slowdown in economic growth from the 1961–1973 period to the 1973– 1988 period, and to the 1988–1995 period. Consequently, progress in the standard of living, as measured by GDP per capita, also slowed down in most OECD countries over the three subperiods. This paper analyses the sources of output growth in 122 industries and in the private business sector to gain an additional perspective on the slowdown of the Canadian economy. We adopt the constant-quality indexes of capital and labor inputs introduced by Dale W. Jorgenson and Zvi Griliches (1967) and later used extensively in Jorgenson et al. (1987), Jorgenson (1995a, b), and Jorgenson and Eric Yip (2000) to identify the sources of growth. These measures allow us to take into account the changing composition of the labor force and the capital stock. At the industry level, we adjust for capital quality by aggregating the capital stock across five asset types by means of the rental prices of capital rather than the asset prices of capital. The use of rental prices allows us to incorporate differences in depreciation rates and tax treatment across different asset types for each industry. At the same time, we combine hours worked by each type of worker using the share of labor compensation to reflect labor quality. At the aggregate level, we apply the same framework by aggregating the capital stock across different asset types and hours worked across different types of workers. A number of studies have compared Canada’s economic growth performance with that of its competitors using this framework (Chrysostom Dougherty, 1991; Dougherty and Jorgenson, 1997; Jorgenson and Yip, 2000). However, this is the first attempt at using this framework to assess Canada’s economic performance at the industry level.

Using bottom-up information from corporate financial statements, we examine the relation between aggregate investment, future equity returns, and investor sentiment. Consistent with the business cycle literature, corporate investments peak during periods of positive sentiment, yet these periods are followed by lower equity returns. This pattern exists in most developed countries and survives controls for discount rates, equity flows, valuation multiples, operating accruals, and other investor sentiment measures. Higher aggregate investments also precede greater earnings disappointments, lower short-window earnings announcement returns, and lower macroeconomic growth. We conclude aggregate corporate investment is an alternative, and possibly sharper, measure of market-wide investor sentiment.

[Closed-end country funds can trade at large premiums and discounts from their foreign asset values (NAVs). Investigating this anomaly, we find that individual fund premiums move together, primarily because of the comovement of their stock prices with the U.S. market. Moreover, an index of country fund premiums differentiates size-ranked U.S. portfolio returns and forecasts country fund stock returns. These findings suggest that international equity prices are affected by local risk. In particular, we show that country fund premium movements reflect a U.S.-specific risk, which may be interpreted as U.S. market sentiment.]

This paper evaluates alternative methods for classifying individual trades as market buy or market sell orders using intraday trade and quote data. The authors document two potential problems with quote-based methods of trade classification: quotes may be recorded ahead of trades that triggered them, and trades inside the spread are not readily classifiable. These problems are analyzed in the context of the interaction between exchange floor agents. The authors then propose and test relatively simple procedures for improving trade classifications.

Between 2010 and 2017, Chinese investors used an investor interactive platform (IIP) to ask public companies around 2.5 million questions, the vast majority of which received a reply within two weeks. We analyze these IIP dialogues using a BERT-based algorithm and provide preliminary evidence on their causes and consequences. Our analyses show most questions reflect investors’ difficulties in processing information already in the public domain. Controlling for other news, higher IIP activity is associated with increases in trading volume, return volatility, market liquidity, and price informativeness as well as decreases in bid-ask spread. Financial statement-related postings increase around the adoption of new accounting standards. Collectively, our results show that investors face significant information processing costs but that IIP activities help reduce these costs, leading to improvements in stock price formation.

This study examines the usefulness of an analyst-based valuation model in predicting cross-sectional stock returns. We estimate firms' fundamental values (V) using I/B/E/S consensus forecasts and a residual income model. We find that V is highly correlated with contemporaneous stock price, and that the V/P ratio is a good predictor of long-term cross-sectional returns. This effect is not explained by a firm's market beta, B/P ratio, or total market capitalization. In addition, we find errors in consensus analyst earnings forecasts are predictable, and that the predictive power of V/P can be improved by incorporating these errors.