@techreport{NBERw5508,
title = "Fixed Costs: The Demise of Marginal q",
author = "Ricardo J. Caballero and John V. Leahy",
institution = "National Bureau of Economic Research",
type = "Working Paper",
series = "Working Paper Series",
number = "5508",
year = "1996",
month = "March",
doi = {10.3386/w5508},
URL = "http://www.nber.org/papers/w5508",
abstract = {The standard version of q theory, in which investment is positively related to marginal q, breaks down in the presence of fixed costs of adjustment. With fixed costs, investment is a non-monotonic function of q. Therefore its inverse, which is the traditional investment function, does not exist. Depending upon auxiliary assumptions, the correlation between investment and marginal q can be either positive or negative. Given certain homogeneity assumptions, a version of the theory based on average q still holds, although under the same assumptions profits and sales perform as well as average q. More generally, q is no longer a sufficient statistic.},
}