Economics & Markets
written by : William F Bryant Economics is one of my favorite areas of discussion, study and analysis. It is a broadly scoped subject that takes on many skill sets and areas of knowledge in an attempt to study behaviors in transactional exchanges. You might be familiar with macroeconomics, microeconomics or even global economics that make use of laws and test theories using calculus, statistics, probability and behavioral psychology. Data comes from financial markets, private institutions, governments, surveys and just about any source of data that may be useful for a comparative or predictive analysis. Many corporations use economists to focus on financial markets and assess market changes due to monetary or fiscal policy changes; other corporations use economists to anticipate changes in market conditions for their specific industry, demand reactions due to price changes, price reactions due to supply changes or any number of relational changes within a company's operations. No matter the area, there is useful information for your business and operations.
Microeconomics is an especially useful tool in business operations for understanding the basic concepts of competitive markets, which well describes the market for nearly every business, and how you can begin to optimize your operations. You will begin to understand pricing impacts on demand, revenues, costs, marginal revenues, marginal costs, and average costs. The best part is that these are easily and commonly displayed visually as are all of the theories in this area of study so that you can make use of this knowledge in operations without having to understand the mathematics that went into it. Perhaps your business is heavily reliant on discretionary spending such as tourism and vacation destinations, or perhaps your business is reliant on commodity prices or interest rates, then macroeconomics can provide a deeper look into relationships and anticipate possible changes in the markets. In any case, you can gain operational insight from knowledge gleaned from these fields or someone familiar with the knowledge in these fields. The only note that I will mention is to be weary of plots and charts if there is not a significant amount of hypothesis testing to support the information that the charts are supposedly indicating. There are a number of mathematic and statistical rules that "allow" data manipulation of certain types of data, but only if those rules are met. For example in regressions, time series data can not simply be used as cross sectional data might be used. There are verifications for stationarity, cointegration, collinearity and a series of rules that apply to ensure the data presents reliable results. Data manipulation can be just that, manipulation. Be cautious and always check the fine print and the testing methods used to achieve the results or be certain that the the methods are at least available should you like to check. |
Areas of Interest
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