Inflation, human capital and Tobin's q

Basu, Parantap, Gillman, Max and Pearlman, Joe 2012. Inflation, human capital and Tobin's q. Journal of Economic Dynamics and Control 36 (7) , pp. 1057-1074. 10.1016/j.jedc.2012.02.004

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Abstract

A strong US postwar low frequency negative correlation exists between inflation and Tobin'sq. To explain this, a production-based monetary asset pricing model is formulated with a rising marginal cost of investment, cash-in-advance and humancapital based endogenous growth. Higher money supply growth causes higher inflation, lower output growth, and a lower q in the long run. The baseline model simulates well correlations of the US inflation rate and Tobin'sq at each frequency of high, business cycle, low, and the “medium term.” It also performs well in correlations and volatilities compared to related exogenous growth versions.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Uncontrolled Keywords:	Tobin's q; Low frequency; Endogenous growth
Publisher:	Elsevier
ISSN:	0165-1889
Last Modified:	19 Mar 2016 22:58
URI:	https://orca.cardiff.ac.uk/id/eprint/33726

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