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Research Details
Rents and Intangible Capital: a "Q+" approach, Journal of Finance
Abstract
In recent years, US investment has been lackluster, despite rising valuations. Key explanations include growing rents and growing intangibles. We propose and estimate a framework to quantify their roles. The gap between valuations --- reflected in average Q --- and investment --- reflected in marginal q --- can be decomposed into three terms: the value of installed intangibles; rents generated by physical capital; and an interaction term, measuring rents generated by intangibles. The intangible-related terms contribute significantly to the gap, particularly in fast-growing sectors. Our findings suggest care in a pure-rents interpretation, given the rising role of intangibles.
Type
Article
Author(s)
Nicolas Crouzet, Janice C. Eberly
Date Published
2023
Citations
Crouzet, Nicolas, and Janice C. Eberly. 2023. Rents and Intangible Capital: a "Q+" approach. Journal of Finance.
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