Asset Pricing and Expected Inflation (Classic Reprint) - Softcover

Inhaltsangabe

Rising inflation and stock returns: a clear, rigorous model explains the link and what it means for investors. It shows how inflation affects asset prices through money growth, investment opportunities, and risk preferences, offering a framework you can actually follow.

This nonfic­tion explores an equilibrium approach to asset pricing that ties together inflation, the money stock, and the production investment opportunities households face. It presents how an expected rise in inflation can lower the real returns on stocks, and how changes in investment opportunities can magnify or dampen this effect. The discussion blends theory with implications for real-world pricing and risk.

• How expected inflation can influence the market portfolio’s real returns and the real interest rate
• The role of the production investment opportunity set in shaping risk premia and asset prices
• Extensions that consider risk aversion and hedging against inflation shocks
• Connections to empirical work on the relationship between inflation and stock returns

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