Time-to-Build, Delivery Lags, and the Equilibrium Pricing of Capital Goods

Sumru Altug

Journal of Money, Credit and Banking, 1993, vol. 25, issue 3, 301-19

Abstract: This paper characterizes the behavior of investment expenditures, optimal capital stocks, and real interest rates in the time-to-build model of investment. The paper derives equilibrium pricing relationships involving the prices of new and used capital and uses these relationships to obtain simple tests of the underlying investment technology. The paper also demonstrates that empirical versions of the delivery lag model are misspecified because the term structure of interest rates over the time horizon for which investment yields productive capital are omitted and that the use of stock market data to measure Tobin's q is inappropriate within the time-to-build model. Copyright 1993 by Ohio State University Press.

Date: 1993
References: Add references at CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://links.jstor.org/sici?sici=0022-2879%2819930 ... 0.CO%3B2-W&origin=bc full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:25:y:1993:i:3:p:301-19

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and Christopher F. Baum ().