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Capital and labor in thelong-run: evidence fromTobin's q for the US

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  • Andre V. Mollick
  • Joao R. Faria

Abstract

This paper assesses different measures of Tobin's q on the US labor market over 1948--2002. We find a negative long-run relationship between the unemployment rate and Tobin's q , which is consistent with capital and labor being complements in production.

Suggested Citation

  • Andre V. Mollick & Joao R. Faria, 2010. "Capital and labor in thelong-run: evidence fromTobin's q for the US," Applied Economics Letters, Taylor & Francis Journals, vol. 17(1), pages 11-14, January.
    • Handle: RePEc:taf:apeclt:v:17:y:2010:i:1:p:11-14
    DOI: 10.1080/13504850701719819
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    References listed on IDEAS

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    1. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    2. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    3. Morley, Bruce, 2006. "Causality between economic growth and immigration: An ARDL bounds testing approach," Economics Letters, Elsevier, vol. 90(1), pages 72-76, January.
    4. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
    5. Samuelson, Paul A, 1988. "Mathematical Vindication of Ricardo on Machinery," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 274-282, April.
    6. Hayashi, Fumio, 1982. "Tobin's Marginal q and Average q: A Neoclassical Interpretation," Econometrica, Econometric Society, vol. 50(1), pages 213-224, January.
    7. Yunus Aksoy & Miguel A. Leon-Ledesma, 2004. "Interest Rates and Output in the Long Run," Money Macro and Finance (MMF) Research Group Conference 2004 92, Money Macro and Finance Research Group.
    8. Lawrence H. Summers, 1981. "Taxation and Corporate Investment: A q-Theory Approach," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(1), pages 67-140.
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    1. Faria, Joao Ricardo & Mollick, Andre Varella, 2010. "Tobin's q and U.S. inflation," Journal of Economics and Business, Elsevier, vol. 62(5), pages 401-418, September.
    2. Sibande, Xolani & Gupta, Rangan & Wohar, Mark E., 2019. "Time-varying causal relationship between stock market and unemployment in the United Kingdom: Historical evidence from 1855 to 2017," Journal of Multinational Financial Management, Elsevier, vol. 49(C), pages 81-88.
    3. Holmes, Mark J. & Maghrebi, Nabil, 2016. "Financial market impact on the real economy: An assessment of asymmetries and volatility linkages between the stock market and unemployment rate," The Journal of Economic Asymmetries, Elsevier, vol. 13(C), pages 1-7.

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