US economist. Tobin was the USA's most distinguished Keynesian economist, meaning not only that he refused to embrace monetarism, but also that he consistently held the view that the original Keynesian theory of income determination was capable of being extended and refined to deal with the macroeconomic problems of the 1980s and 1990s. He was awarded the Nobel Prize for Economics in 1981 for contributions to macroeconomics. At the centre of Tobin's work was the concept of financial asset-holding. In his view, the ultimate measure of demand expansion or deflation was the relationship between the equities and debts of business enterprises as priced on the stock market, and the replacement cost of the assets of these enterprises at current prices; the ratio of these two global magnitudes he called ‘ q ’. The principal way in which events in the financial sector affect aggregate demand is by changing ‘ q ’. Monetary policy can lead to such a change, but so can a change in asset…