Pinned
A simple new paper in which we explain why corporate valuations relative to earnings have soared since the early 1980s, while valuations relative to corporate cash flow have remained relatively stable. The key is that companies have been able to grow earnings without increasing
The observed decline in labor’s share of corporate output, in conjunction with relatively weak corporate investment, generates a persistent rise in the ratio of corporate valuation relative to corporate earnings, from Andrew Atkeson, @Jonheathcote, and @fab_perri
