Inflation uncertainty and real economic activity: an alternative approach
Increased uncertainty about inflation is shown to encourage inflation hedging which, in turn, reduces the macro-economic costs of that uncertainty. Portfolio theory and empirical evidence support the contention that only the portion of inflation volatility that cannot be hedged has real economic eff...
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| Veröffentlicht in: | The review of economics and statistics 1986-08, Vol.68 (3), p.493-500 |
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| container_title | The review of economics and statistics |
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| creator | Kantor, L.G |
| description | Increased uncertainty about inflation is shown to encourage inflation hedging which, in turn, reduces the macro-economic costs of that uncertainty. Portfolio theory and empirical evidence support the contention that only the portion of inflation volatility that cannot be hedged has real economic effects. Additional empirical results suggest that: (i) increased inflation volatility in the early seventies was eventually followed by portfolio reallocations that allowed for greatly improved inflation hedging, and (ii) the deleterious effect of inflation uncertainty on real economic activity shown in previous studies is significantly smaller after 1975. |
| doi_str_mv | 10.2307/1926027 |
| format | Article |
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| identifier | ISSN: 0034-6535 |
| ispartof | The review of economics and statistics, 1986-08, Vol.68 (3), p.493-500 |
| issn | 0034-6535 1530-9142 |
| language | eng |
| recordid | cdi_proquest_journals_194685166 |
| source | Business Source Complete; Periodicals Index Online; JSTOR Mathematics & Statistics; Jstor Complete Legacy |
| subjects | capital asset pricing model Capital assets Economic activity Economic inflation Economic theory Economic uncertainty Financial investments Financial portfolios futures trading Hedging Inflation Inflation rates Inflation risk investment Investment return rates Investment risk Macroeconomics Market portfolios portfolio balance approach Pricing Risk Systematic uncertainty |
| title | Inflation uncertainty and real economic activity: an alternative approach |
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