NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Stock Market and Capital Accumulation

Robert E. Hall

NBER Working Paper No. 7180
Issued in June 1999
NBER Program(s):   EFG   PR

If firms purchase capital up to the point where there is no further marginal benefit, and the firms' securities are equal in value to the capital, then the market value of securities measures the quantity of capital. I explore the implications of this hypothesis using data from U.S. non-farm, non-financial corporations over the past 50 years. The hypothesis implies that corporations have formed large amounts of intangible capital, especially in the past decade. The resources for expanding capital have come from the output of the existing capital. An endogenous growth model can explain the basic facts about corporate performance, with only a modest increase in the productivity of capital in the 1990s.

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Document Object Identifier (DOI): 10.3386/w7180

Published:

  • Proceedings, Federal Reserve Bank of San Francisco conference "Irrational Exuberance?" April 21, 2000 ,
  • American Economic Review, Vol. 91, no. 5 (December 2001): 1185-1202 ,
  • Robert E. Hall, 2000. "The stock market and capital accumulation," Proceedings, Federal Reserve Bank of San Francisco, issue Apr.

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