Testing for short termism in the UK stock market: a reply

Article Abstract:

The claim that the survivorship bias could give rise to erroneous results is not convincing. In the study on the presence of short termism in the UK stock market, results provided 'prima facie' evidence that short termism actually existed when the sample examined was limited to firms which survived through the 1980s. However, the view that the variable risk premium was not primarily responsible for the observed excess discounting of longer-term cash flows deserves support.

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Modelling the impact of demographic change upon the economy

Article Abstract:

A study was conducted to show that simulations based on calibrated general equilibrium frameworks support the most reliable evidence in modelling the impact of demographic change upon the economy. A model was designed to evaluate the influence of reforms on pension systems. Results indicated that the effect of uncertainty correlated with the source of shocks and that the most critical kind of uncertainty concerns about the future labor income.

Economics, Research and Development in the Social Sciences and Humanities, Pension, health, and welfare funds, Pension Funds & Benefit Plans, Pension Funds, Models, Economic aspects, Pensions, Demographic transition

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Testing for short termism in the UK stock market: a comment

Article Abstract:

The study on the existence of short-termism in the UK stock market suffers from two serious flaws. The first involves the strong, yet implausible, assumption that risk premia per unit time is different across companies but remains constant over time. The second involves the survivorship bias problem, which could result in wrong estimates of the risk premia term structure.

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