Arbeitspapier
Inflation, Human Capital and Tobin's q
A less well-known empirical finding for the US and UK is a pronounced low frequency negative relationship between inflation and Tobin's q; a normalized market price of capital. This stylized fact is explained within a dynamic stochastic general equilibrium model using three key features: (i) a Lucas and Prescott (1971) physical capital adjustment cost with a rising marginal cost of investment, (ii) production of human capital with endogenous growth and (iii) an inflation tax cash-in-advance economy. The baseline endogenous growth model matches the US inflation and q long term correlation, while comparable exogenous growth are unable to do this, and it outperforms the exogenous growth models in explaining business cycle volatilities of q and of stock returns.
- ISBN
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978-615-5024-08-5
- Language
-
Englisch
- Bibliographic citation
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Series: IEHAS Discussion Papers ; No. MT-DP - 2010/17
- Classification
-
Wirtschaft
Price Level; Inflation; Deflation
Financial Markets and the Macroeconomy
Asset Pricing; Trading Volume; Bond Interest Rates
- Subject
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Low frequency
Tobin's q
inflation tax
endogenous growth
Inflation
Tobins Q
Endogenes Wachstumsmodell
Dynamisches Gleichgewicht
USA
Großbritannien
- Event
-
Geistige Schöpfung
- (who)
-
Basu, Parantap
Gillman, Max
Pearlman, Joseph
- Event
-
Veröffentlichung
- (who)
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Hungarian Academy of Sciences, Institute of Economics
- (where)
-
Budapest
- (when)
-
2010
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Basu, Parantap
- Gillman, Max
- Pearlman, Joseph
- Hungarian Academy of Sciences, Institute of Economics
Time of origin
- 2010
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Why the Tobin tax can be stabilizing
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