Topics in Forensic Economics
Paper Session
Saturday, Jan. 7, 2017 7:30 PM – 9:30 PM
Sheraton Grand Chicago, Wrigleyville
- Chair: Marc Weinstein, Team Economics, LLC
Staggered Wage Net Discount Rates: Accounting for Possible 'Sticky' Wages
Abstract
The authors report the time-series properties of wage net discount rates for the period 1981.01-2012.12, formulated on the basis of contemporaneously observed wage growth rates and various discount rates (determined by yields on U.S. Treasury notes of differing maturities). Gerald D. Martin (Determining Economic Damages, various editions) has noted the relatively rapid response of interest rates to monetary stimuli compared with that of wages, which, being somewhat institutionally driven, respond with a lag. Of course Martin was not the first to observe or mention these phenomena, but he does relate the phenomena specifically to the suitability of forensic economic application of wage net discount rates as typically derived (i.e., using contemporaneously observed wage growth rates and discount rates). The present study takes account of wage growth rates influenced by possible institutional factors by lagging the time frame of their observation relative to discount rates when the two are combined to form what we term “staggered” wage net discount rates. The staggered rates constructed for the post-1980 era are then examined for stationarity and magnitude. The choice of lag structure for the staggering is empirically determined, but in conjunction with lag durations suggested by the macroeconomics literature on “sticky” wages. The reported results should be of interest to forensic economists that use wage net discount rates as well as critics of their use.When to Use Fair Value and Fair Market Value Standards in Valuation and Commercial Damage Cases
Abstract
When to use Fair Value and Fair Market Value Standards in Valuation and Commercial Damage CasesDiscussant(s)
Robert Thornton
, Lehigh University
Kevin E. Cahill
, Boston College
Scott Gilbert
, Southern Illinois University-Carbondale
JEL Classifications
- D4 - Market Structure, Pricing, and Design
- K1 - Basic Areas of Law