Financial Daily from THE HINDU group of publications
Monday, Mar 25, 2002
Financial Daily from THE HINDU group of publications Monday, Mar 25, 2002 |
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Opinion
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Letters James Tobin
Prof Brahmananda's article on James Tobin is interesting (Business Line, March 20). But it needs a correction for the record. On the late Nobel Laureate's q-ratio he says: "When share prices move up, the market values become greater than historical capital values of the firms. The ratio of market values to capital values is the q-ratio." The ratio is of market value of an asset to its replacement cost — not book value, as implied in the article (Economic Principals — Masters and Mavericks of Modern Economics, David Warsh). The Cowles Commission, which pioneered studies in mathematical economics and econometrics, moved from the University of Chicago to Yale University to oblige Tobin, its Director. Obviously, he did not want to be anywhere near Milton Friedman, his bete noire at Chicago! A little known fact is that he served on a destroyer during the Second World War and went through Navy Officers' Training School with Herman Wouk, who gave him an incidental part in his novel, The Caine Mutiny. A. Seshan
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