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A Methodological Note on Measuring the Functional Efficiency of Capital Markets

Author

Listed:
  • Eklund, Johan E.

    (Jönköping International Business School and The Royal Institute of Technology)

  • Desai, Sameeksha

    (Max Planck Institute of Economics)

Abstract

We apply the accelerator principle to measure the functional efficiency of capital markets. We estimate the elasticity of capital with respect to output using a panel of firms across 44 countries, and compare the results with existing approaches. Furthermore, we correlate our measure with corporate governance institutions.

Suggested Citation

  • Eklund, Johan E. & Desai, Sameeksha, 2008. "A Methodological Note on Measuring the Functional Efficiency of Capital Markets," Ratio Working Papers 121, The Ratio Institute.
    • Handle: RePEc:hhs:ratioi:0121
    as

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    References listed on IDEAS

    as
    1. Wurgler, Jeffrey, 2000. "Financial markets and the allocation of capital," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 187-214.
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    5. Gugler, Klaus & Mueller, Dennis C & Yurtoglu, B Burcin, 2004. "Corporate Governance and the Returns on Investment," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 589-633, October.
    6. Jorgenson, Dale W, 1971. "Econometric Studies of Investment Behavior: A Survey," Journal of Economic Literature, American Economic Association, vol. 9(4), pages 1111-1147, December.
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    More about this item

    Keywords

    Allocation of capital; accelerator principle; functional efficiency:;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • P00 - Political Economy and Comparative Economic Systems - - General - - - General

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