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Tobinovo Q - teorie a aplikace
[Tobin´s Q - theory and application]

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  • Václava Pánková

Abstract

Investment expenditure relates to an evident optimization problem: to create an optimal capital stock which is a function of expected profits. According to the Tobin's Q - theory, investment depends on the ratio Q of the market value of business capital assets to their replacement value. A firm's investment should rise with its Q. In practice, however, Q is not observable and the measurement of numerator as well as of denominator presents problems in empirical implementation. Looking for an appropriate approach, both macroeconomic and microeconomic level can be followed. The macroeconomic Q can be derived from the Keynes equation for the price level. Tobin's Q is given here as a measure of the economy's willingness to invest (Mundschenk, 2000). As for the firms, a VAR model is estimated using panel data. Relevant forecasts enable to quantify an expected value of a firm even in case that it is not quoted on stock markets (Behr and Bellgardt, 2002). To characterize a macroeconomic background, the Q of the Czech Republic was computed. Than, the panel data approach was applied to the Czech machinery. The Qs were computed with an evident majority of negative values and a zero correlation to investment, when following the detailed panel structure. A high degree of zero investment might be a signal for policy makers which seems to be recognized by governmental authorities as a necessity of foreign - investment supporting policy.

Suggested Citation

  • Václava Pánková, 2005. "Tobinovo Q - teorie a aplikace [Tobin´s Q - theory and application]," Politická ekonomie, Prague University of Economics and Business, vol. 2005(5), pages 601-608.
    • Handle: RePEc:prg:jnlpol:v:2005:y:2005:i:5:id:524:p:601-608
    DOI: 10.18267/j.polek.524
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    References listed on IDEAS

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    1. Abel, Andrew B & Blanchard, Olivier J, 1986. "The Present Value of Profits and Cyclical Movements in Investment," Econometrica, Econometric Society, vol. 54(2), pages 249-273, March.
    2. Richard E. Baldwin & Rikard Forslid, 1998. "Incremental Trade and Endogenous Growth: A q-Theory Approach," NBER Working Papers 6477, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    implementation of Q; panel data; Tobin´s Q; behaviour of firms ? investment;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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