Title: Investment options and the business cycle
Description: "This paper extends Lucas (1978) to a production economy with two capital goods.  It is an RBC model in which each unit of investment requires a new idea, an "option".  When options are scarce, new capital is harder to put in place and the value of old capital rises.  Thus the stock market and Tobin's Q are negative indexes of intangibles.  During a boom, Q rises gradually, as options are used up.  Because investment represents an exercise of options, it has an intertemporal substitution tradeoff that is absent in the adjustment-cost model.  Equilibrium may be efficient even without markets for knowledge; the stock market may suffice"--National Bureau of Economic Research web site.