Is Disinflation Good for the Stock Market?
|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.|
|Appears in Collections:||Peter Henry's Collection|
Files in This Item:
|PH Is Disinflation Good.pdf||Peter Henry Is Disinflation Good for the Stock Market?||396.04 kB||Adobe PDF||View/Open|
Items in FDA are protected by copyright, with all rights reserved, unless otherwise indicated.