Procrastinating on December 13, 2016
The Phrase "Structural Reform" Considered Harmful...

Should-Read: Where a high Tobin's Q--ratio of stock market value to replacement cost--is driven by market power, we would not expect high Q to carry high investment with it. But how much has market power increased? And how much shadow market power is driven by common ownership by financiers of all the firms in any particular industry? Or do financiers simply prefer low-investment firms because they are high-payout firms, and thus firms' cash flows are of relatively short duration?

Nick Bunker: What Could Boost U.S. Business Investment?: "German Gutierrez and Thomas Philippon... why business investment... has been so lackluster since the turn of the 21st century...

...The Q [ratio of stock market value to replacement cost] for overall business investment in the United States is, on average, signaling that business investment should be much higher.... They don’t find any evidence that firms lack... financing.... The biggest explanatory factors... is the increasing concentration of companies within industries and increased “common ownership” of companies by large investment firms. These “commonly owned” companies... use these their funds to finance share buybacks and other shareholder payouts... http://www.nber.org/papers/w22897.pdf

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