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Evidence that cash flow has a significant effect on company investment spending, after controlling for Tobin's average Q, has often been interpreted as suggesting the importance of financing constraints. Recent work on measurement error in the Q model casts doubt on this interpretation. It is possible that the Q model may not be identified if there are(More)
The views expressed in this paper are those of the authors, and not necessarily those of the Bank of England. We would like to thank two anonymous referees for helpful comments and suggestions. Contents Abstract 5 Summary 7 1 Introduction 11 Capital wealth and capital services 11 Previous studies 12 Plan of the paper 13 2 Theory of capital measurement 14(More)
We would like to thank the Bank of England, and Jens Larsen in particular, for help in compiling the data. We thank two anonymous referees, seminar participants at the Bank of England and the Money Macro Finance Conference, for helpful comments. We are specially indebted to Jordi Galí and Mark Gertler, who provided the foundations for our analysis and whose(More)