Lorenzoni, Guido; Walentin, Karl - Society for Economic Dynamics - SED - 2006
and Tobin’s q. A firm is financed partly by insiders, who control its assets, and partly by outside investors. When …-rent on invested capital. This rent is priced into the value of the firm, so Tobin’s q is driven by two forces: changes in … correlation between q and investment. We calibrate the model and show that, thanks to this effect, the model can generate …