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Google's chief economist has been quoted as saying Google has a "GDP beta" of one. So this shouldn't really be a surprise.
by crsmith 18y ago
Google's chief economist has been quoted as saying Google has a "GDP beta" of one. So this shouldn't really be a surprise.
- byrneseyeview 18y agoBeta, and not r-squared? A beta of one would imply that Google's revenue (or profit?) increase exactly as much as the GDP. An r-squared of one would imply that Google's revenue changes in proportion to GDP changes. But he probably knows this better than I do, so presumably I'm missing something.
- mhb 18y agoReally? I thought a beta of one means that if GDP goes up 10%, then Google's revenue goes up 10%. From http://en.wikipedia.org/wiki/Beta_coefficient http://en.wikipedia.org/wiki/Beta_coefficient: More specifically, a stock that has a beta of 2 follows the market in an overall decline or growth, but does so by a factor of 2; meaning when the market has an overall decline of 3% a stock with a beta of 2 will fall 6%.
- byrneseyeview 18y agoAs far as I know, you are agreeing with what I said. The GDP has not gone up 90% per year any time recently.
- deleted 18y ago[deleted]
- sd 18y agoIn a linear regression model, r-squared represents how correlated the model is with the data, while beta indicates the relationship between an outcome (e.g., revenue) to an input (e.g., GDP). Thus, a r-squared of one in a model where profit is the dependent variable and GDP is the single independent variable suggests that profit is 100% correlated with GDP. A beta of 1 indicates that profit moves in the same direction and to the same degree as GDP.
- crsmith 18y agoHere's the link fwiw http://money.cnn.com/2008/05/09/technology/where_does_google_go.fortune/index2.htm http://money.cnn.com/2008/05/09/technology/where_does_google...