Tobins q? — Myrdals Q!
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Tobins q? — Myrdals Q!
Ein Fallbeispiel für den Wert von Fremdsprachenkenntnissen
Credit and Capital Markets – Kredit und Kapital, Vol. 28 (1995), Iss. 2 : pp. 175–200
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Klaus J. W. Schmidt, Frankfurt/Main
References
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Abstract
Tobin's q? - Myrdal's Q!
An Example of Why It Is Important to Know Foreign Languages
In two articles published in the early-1930s, the Swedish economist Gunnar Myrdal critically reviews the interest spread theory of Knut Wicksell. He details and modifies certain of Wicksell’s ideas by reformulating the natural rate of interest as the marginal efficiency of capital and the rate of interest on money as the discount rate. Furthermore, he shows that the unobservable relationship between these two rates corresponds to the ratio between the market value and the replacement cost of real capital, for which a statistical representation can be constructed. He thereby anticipates the q-theory of James Tobin by at least 30 years, moreover he calls his variable @. Even on the level of details, Tobin’s and Myrdal’s analyses are remarkably similar. This is apparent from Myrdal’s interpretation of the rate of interest on money as the theoretical representative of the conditions governing lending to firms, his distinction between average and marginal ®, his views on the relevance of @ for different levels of aggregation, as well as his presumption that the Q-variable will remain numerically unchanged when inflation rates are correctly anticipated. In view of the important role of the g-variable in Keynesian macroeconomic theory, as argued by Tobin, Myrdal’s ideas represent a noteworthy contribution to economic thought. Unfortunately, language barriers apparently prevented these ideas from propagation into a broader academic community, as Myrdal published his articles in such ‘exotic’ languages as Swedish and German.