Productivity and equity market fundamentals: 80 years of evidence for 11 OECD countries

Jakob B. Madsen; E. Philip Davis

doi:10.1016/j.jimonfin.2008.05.008

Productivity and equity market fundamentals: 80 years of evidence for 11 OECD countries

Jakob B. Madsen, E. Philip Davis

Research output: Contribution to journal › Article

4 Citations (Scopus)

Abstract

The share market boom in the 1990s is often linked to the acceleration in labour and total factor productivities over the same period. This paper explores the argument that labour and total factor productivities are inaccurate measures of firm's earnings, which underlie equity valuations, and that capital productivity is a better measure of earnings. Using 80 years of data for 11 OECD countries, it is shown empirically that the link of capital productivity to share returns is indeed stronger than that of labour productivity and TFP.

Original language	English
Pages (from-to)	1261-1283
Number of pages	23
Journal	Journal of International Money and Finance
Volume	27
Issue number	8
DOIs	https://doi.org/10.1016/j.jimonfin.2008.05.008
Publication status	Published - 1 Dec 2008
Externally published	Yes

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10.1016/j.jimonfin.2008.05.008

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