Relative Factor Price Changes and Equity Prices / Peter J. Elmer, Patric H. Hendershott.

Format:

Book

Author/Creator:

Elmer, Peter J.

Contributor:

National Bureau of Economic Research.

Hendershott, Patric H.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1449.

NBER working paper series no. w1449

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1984.

Summary:

This paper suggests that the decline in equity prices, and thus in Tobin's average q, during the 1970s may be attributable to changes in expected relative factor prices. More specifically, q is shown to be a negative function of the extent to which current relative factor price expectations differ from those when capital was put in place. Because relative factor prices became more volatile after 1967, the observed decline in average q, and thus in stock prices, can be explained by the "relative price" hypothesis.

Notes:

Print version record

September 1984.