Money,government debt,q, and investment

The aim of this study is to analyze empirically the linkages among changes in money and federal debt, Tobin's q variable, and investment expenditures in the United States. The vector autoregressive modeling technique proposed by Hsiao and extended by Caines, Keng, and Sethi is employed. The patterns of Granger-causality from the estimated vector autoregression are consistent with the transmission mechanism outlined by Tobin. Both money and debt Granger-cause q; q in turn causes investment and money and debt's effects upon investment operate primarily through their effects on q. However, neither money nor debt are exogenous.