Approximating Tobin’s Q Across Countries with Market Cap to GDP

Summary

The document addresses the challenge of comparing Tobin’s Q across countries when direct data are unavailable. It notes that data needed to calculate the ratio are often missing, particularly for emerging markets, making broad country rankings difficult to construct from comparable measures.

As a practical proxy, the response suggests using stock market capitalization divided by GDP. This offers a more accessible cross-country indicator, but the document does not provide sources, calculations, or evidence quantifying how closely this proxy tracks Tobin’s Q. The ratio should therefore be treated as an approximation rather than an equivalent measure, and comparisons may reflect differences in market composition as well as valuation.

Key ideas

• Direct data for calculating Tobin’s Q may be unavailable for many countries.
• The data gap is especially noted for emerging markets.
• Market capitalization divided by GDP is suggested as a proxy for Tobin’s Q.
• The proxy enables comparisons but is not shown to equal or closely track Tobin’s Q.

Tags

# Where to get Tobin's Q by country


# Where to get Tobin's Q by country












I am trying to rank countries based on Tobin's Q ratio. US data can be easily gathered from FED's report and is available on multiple website.

I want get data on other countries with high Index of Economic Freedom.

Can anyone suggest sources that might have this data?

## Answer by Chris Andy (score 1)

https://quant.stackexchange.com/a/25854

Data to compute Tobin's Q for most other countries, particularly emerging countries, are not available. As a result, many economists have begun to use the ratio of the stock market capitalization to GDP as an approximation for Tobin's Q.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.