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

E Davis () and Jakob Madsen ()

Journal of International Money and Finance, 2008, vol. 27, issue 8, 1261-1283

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.

Keywords: Productivity; Share; returns (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:27:y:2008:i:8:p:1261-1283

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