The Economics of the Stock Market

by Andrew Smithers Narrated by Dennis Kleinman

Overview

The current consensus economic model, the neoclassical synthesis, depends on aprioristic assumptions that are shown to be invalid when tested against the data and fails to include finance. Economic policy based on this consensus has led to the financial crisis of 2008, the "Great Recession" that followed, and the slow subsequent rate of growth. In The Economics of the Stock Market, Andrew Smithers proposes a model that is robust when tested, and by including the impact of the stock market on the economy, overcomes both these defects. The faults of the current consensus model are shown to result typically from an unscientific methodology in which assumptions are held to be valid despite their incompatibility with data evidence. Smithers demonstrates examples of these faults: the assumption that leverage does not affect the value of produced capital assets; the assumption that short-term and long-term interest rates, and the cost of equity capital, are codetermined; and the assumption that the decisions of corporate managements aim to maximize the present value of corporate assets rather than the value determined by the stock market. The Economics of the Stock Market proposes a model that includes and explains the stationarity of real returns on equity, based on the interaction of the differing utility preferences of the managers of companies and the owners of financial capital.

Editorial Reviews

From the Publisher

"Smithers was one of the few economists to warn about the internet bubble and the dangers posed by the ensuing global credit boom. His current concerns shouldn't be dismissed lightly." — Edward Chancellor, Reuters Breakingviews

"While comparisons with Keynes might seem overly grand, it is possible to feel a similar sense of freshness at the approach taken by Andrew Smithers in his new book. He ostensibly focuses on the stock market but the treatment is wide ranging. The book sets out to challenge a number of assumptions and results in neoclassical models..." — Sunil Krishnan, Society of Professional Economists

"The scope of The Economics of the Stock Market is ambitious and its tone quite provocative; both practitioners and academics will find this book relevant and stimulating." — Javier López Bernardo, PhD, CFA

Society of Professional Economists Sunil Krishnan

“In his new book [Smithers] ostensibly focuses on the stock market, but the treatment is wide ranging. The book sets out to challenge a number of assumptions and results in neoclassical models.”

Reuters New Service

“Smithers was one of the few economists to warn about the internet bubble and the dangers posed by the ensuing global credit boom. His current concerns shouldn’t be dismissed lightly.”

Product Details

BN ID:	2940160491165
Publisher:	Ascent Audio
Publication date:	06/06/2023
Edition description:	Unabridged

Videos