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

Jakob B. Madsen, E. Philip Davis

Research output: Contribution to journalArticle

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 languageEnglish
Pages (from-to)1261-1283
Number of pages23
JournalJournal of International Money and Finance
Volume27
Issue number8
DOIs
Publication statusPublished - 1 Dec 2008
Externally publishedYes

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