The Stock Market and Capital Accumulation: An Application to UK Data

Eliades, Demetrios; Weeken, Olaf

doi:10.2139/ssrn.724024

Cited by 6 publications

(4 citation statements)

References 17 publications

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“…The paper of Eliades and Weeken (2004) applies Hall's methodology to the U.K. These authors find no trace of intangible capital for the U.K. before 1990 but reach the same qualitative results as Hall (2001) for the late 90s.…”

Section: Relationship To Related Literaturementioning

confidence: 84%

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The Stock of Intangible Capital in Canada: Evidence from the Aggregate Value of Securities

Belhocine

2009

SSRN Journal

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This paper measures the size of the stock of intangible capital in Canada using newly released data on the market value of all securities in the economy. The approach taken relies on a quantitative application of the q-theory of investment to generate the quantity of capital owned by firms. I find that the intangible capital stock accounted for approximately 30% of overall capital since 1994. Of this, the R&D reported by national accounts makes up only 23%. These results imply that official Canadian statistics failed to account for 26% of the value of the capital stock in their 2005 quarterly data collection. In addition, I find that the magnitude of the intangible capital stock is comparable to that reported using a cost approach, confirming the size of the findings and ascertaining the need to include intangibles in empirical models and in investment data.

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Section: Relationship To Related Literaturementioning

confidence: 84%

“…For the sake of comparison, the same parameters as those in Hall (2001) are used. These are also used by Eliades and Weeken (2004). Section 6 analyzes the impact of specifying different ranges of parameters on the implied stock of capital k t and further discusses the rationale for the choice of certain parameter values.…”

Section: Empirical Strategymentioning

confidence: 99%

The Stock of Intangible Capital in Canada: Evidence from the Aggregate Value of Securities

Belhocine

2009

SSRN Journal

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“…Finally, one anomaly in Hall's findings is that the quantity of intangibles falls below zero for a decade, starting in the mid-70s. Eliades and Weeken (2004) apply Hall's methodology to the U.K. These authors also find negative intangibles throughout the 70s, the 80s and early 90s.…”

Section: Difference With Other Approachesmentioning

confidence: 93%

The Embodiment of Intangible Investment Goods: A Q-Theory Approach

Belhocine

2010

IMF Working Papers

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractRecent empirical findings on firms' expenditure towards the creation and acquisition of knowledge goods, otherwise known as intangibles, suggest that their share in overall investment has grown considerably. Still, intangible investment is rarely present in investment models. In this paper, I extend the q-theory of investment to model explicitly the decision of firms to invest in intangibles. I then use the model to measure the contribution of intangible goods to the overall capital stock in the U.S. The model highlights the embodiment of intangible goods in tangibles and the role of relative price movements in the measurement of the contribution of each type of investment to the overall capital stock. In particular, given that the relative cost of the main input to intangible production, skilled labor, rose substantially in the 80s and 90s, the price of intangibles inherits this rise. As a result, the downward trend in the aggregate investment deflator series reported by national accounts, which accounts only for the presence of tangible investment goods, is found to have a significant downward bias in the 90s. The model also shows that the growth in the overall capital stock from the late-80s until 2000 was driven mainly by an increase in the contribution of intangibles. However, the contribution of intangibles fell consistently after 2000. These results underscore the importance of accounting for the movements in the price of intangibles rather than focusing only on their rising share in overall investment.

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“…7 Fuller data descriptions and sources are given in the Appendix (data are available on request). 8 For a discussion of the US context, seeNakamura (2001) andLev (2003).9 The discussion here is drawn fromEliades and Weeken (2004).…”

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confidence: 99%

RETURNS TO EQUITY, INVESTMENT AND Q: EVIDENCE FROM THE UK

Price

Schleicher

2005

The Manchester School

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Conventional wisdom has it that Tobin's Q cannot help explain aggregate investment. However, the standard linearized present-value asset price decomposition suggests that it should be able to predict other variables, such as stock returns. Using a new data set for the UK, we find that Q has strong predictive power for debt accumulation, stock returns and UK business investment. The correctly signed results on both returns and investment appear to be robust, and are supported by the commonly used and bootstrapped standard error corrections, as well as recently developed asymptotic corrections.

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The Stock Market and Capital Accumulation: An Application to UK Data

Cited by 6 publications

References 17 publications

The Stock of Intangible Capital in Canada: Evidence from the Aggregate Value of Securities

The Stock of Intangible Capital in Canada: Evidence from the Aggregate Value of Securities

The Embodiment of Intangible Investment Goods: A Q-Theory Approach

RETURNS TO EQUITY, INVESTMENT AND Q: EVIDENCE FROM THE UK

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