Increasing equity prices support investments

Analysis - May 2019 - no. 8

Authors Spange, Morten; Hensch, Jonas Ladegaard
Subject Business investment; Stock prices; Firms and households
Type Analysis
Year 2019
Published 2 May 2019
This analysis shows how fluctuations in equity prices affect business in-vestments in fixed capital via a "Tobin's Q channel". The main conclusion is that an increase of 10 per cent in the prices of Danish listed firms leads to an increase of 1.8 per cent in those firms' investments.