International Journal of Business and Economics Volume 9, No. 1 April​, 2010

An Alternative Perspective on Tobin's Q and Aggregate Investment Expenditure

Mark J. Holmes

Department of Economics, Waikato University, New Zealand

Abstract

This study provides new evidence on the relationship between Tobin's Q and private investment. Using a testing procedure advocated by Bierens applied to US data, both series are found to be stationary around a nonlinear deterministic trend and are co-trended insofar as they share a common nonlinear deterministic trend.

Keywords：Tobin's Q, investment, nonlinear trend, co-trend.

JEL Classifications：E2, C2, C3.

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