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http://hdl.handle.net/2451/31388
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| Title: | Is Disinflation Good for the Stock Market? |
| Authors: | Henry, Peter |
| Issue Date: | Jan-2007 |
| Publisher: | Center on Democracy, Development, and Rule of Law |
| Abstract: | The stock market appreciates by an average of 24 percent in real dollar
terms when countries attempt to stabilize annual inflation rates that
are greater than 40 percent. In contrast, the average market response is
0 when the pre-stabilization rate of inflation is less than 40 percent.
These results suggest that the potential long-run benefits of
stabilization may dominate short-run costs at high levels of inflation,
but at low to moderate levels of inflation, benefits may be offset by
costs in a present value sense. Stock market responses also help predict
the change in inflation and output in the year following all 81
stabilization efforts. |
| URI: | http://hdl.handle.net/2451/31388 |
| Appears in Collections: | Peter Henry's Collection
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