Inflation, human capital and Tobin's Q

Gillman, Max, Basu, Parantap and Pearlman, Joseph 2011. Inflation, human capital and Tobin's Q. [Working Paper]. Cardiff Economics Working Papers (E2009), vol. 16. Cardiff Business School. Available at: http://business.cardiff.ac.uk/research/working-pap...

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Abstract

A pervasive empirical Önding for the US economy is that ináation is negatively correlated with the normalized market price of capital (Tobinís q) and growth. A dynamic stochastic general equilibrium model of endogenous growth is developed to explain these stylized facts. In this model, human capital is the principal driver of self-sustained growth. Long run comparative statics analysis suggests that ináation diverts scarce time resource to leisure which lowers human capital utilization. This impacts growth adversely and modulates capital adjustment cost downward resulting in a decline in Tobinís q. For the short run, a Tobin e§ect of ináation on growth weakens the negative association between ináation and q.

Item Type:	Monograph (Working Paper)
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory H Social Sciences > HG Finance H Social Sciences > HM Sociology
Publisher:	Cardiff Business School
ISBN:	1749-6101
Date of First Compliant Deposit:	30 March 2016
Last Modified:	19 Mar 2016 22:51
URI:	https://orca.cardiff.ac.uk/id/eprint/29576

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