Inflations Research Articles

Analyzing the Relationship between Real Estate Investments and Portfolio Diversification

Real estate has long been considered an attractive investment option for individuals and institutions seeking to build wealth and diversify their portfolios. Unlike traditional investment vehicles such as stocks and bonds, real estate offers unique characteristics that can potentially enhance returns and mitigate risk. This analysis aims to explore the role of real estate investments in portfolio diversification and assess their potential impact on overall portfolio performance. Portfolio diversification is a fundamental principle in investment management, as it helps to spread risk across different asset classes and mitigate the impact of market fluctuations on a portfolio's overall value. By including assets with low or negative correlations, investors can reduce the volatility of their portfolios and potentially achieve higher risk-adjusted returns. Real estate investments, including direct property ownership, real estate investment trusts (REITs), and other real estate-related securities, have traditionally exhibited low correlations with other asset classes, such as equities and bonds. This low correlation can be attributed to the unique characteristics of real estate, including its tangible nature, the presence of rental income streams, and the potential for capital appreciation. Furthermore, real estate investments can provide a hedge against inflation, as property values and rental rates tend to increase during periods of rising prices. This feature makes real estate an attractive diversification option, particularly for investors seeking to protect their portfolios from the eroding effects of inflation. This analysis will delve into the historical performance of real estate investments, examine their risk and return characteristics, and evaluate their potential contribution to portfolio diversification. By examining empirical data and leveraging portfolio optimization techniques, we aim to provide insights into the optimal allocation of real estate investments within a diversified portfolio.

Evaluating the Impact of Inflation and Exchange Rates on the Net Active Value (NAV) of Conventional Mutual Funds in Indonesia

The growing development in the financial industry and the current high inflation rate are a great worry for investment prospects, especially mutual funds. Conventional mutual funds in Indonesia have experienced significant growth in the capital market. In the last 10 years, the number of domestic mutual funds has continued to increase. One measure of investment performance in mutual funds is proxied by the Net Asset Value (NAV) of mutual funds. Therefore, the objective of this study is to evaluate the influence of macroeconomics variables on the NAV of conventional mutual funds in Indonesia. In this study, using commercial bank data in Indonesia, we estimate an empirical model of the effect of inflation and exchange rates on the NAV of conventional mutual funds in Indonesia during the period 2012–2022. We employ a time series model using the Ordinary Least Square (OLS). The main findings show that while inflation has no effect on the NAV of conventional mutual funds, the exchange rate has a significant effect on it because there are many instruments in conventional mutual funds that have invested abroad due to changes in exchange rates that appear with dominant results that do not affect the growth of the NAV of conventional mutual funds. Keywords: macroeconomics, net active value (NAV), mutual funds

Macroeconomic Impact of Environmental Policy Uncertainty and Monetary Policy Implications

This paper evaluates the macroeconomic implications of uncertainty arising from delays or unpredictability regarding the timing and extent of environmental policy implementation. An environmental dynamic stochastic general equilibrium (E-DSGE) model shows that increasing uncertainty about environmental policies is associated with a subsequent decline in investment, as firms prefer to postpone investment decisions. The decline in physical investment within polluting sectors subsequently induces a fall in employment, consumption and output. Using a novel climate policy uncertainty index developed by Gavriilidis (2021), alongside Google Trend data index, the paper shows that uncertainty about climate regulations has both recessionary and inflationary effects, corroborating the theoretical findings. Further analysis suggests that appropriate monetary policy tools could moderate the welfare cost arising from the environmental policy uncertainty, emphasizing the need for Central Banks to adopt a more aggressive stance in stabilizing GDP and inflation in the face of environmental policy uncertainty shocks.

THE EFFECT OF INFLATION, EXPORT-IMPORT AND INTEREST RATES ON SALES THROUGH GDP/GDP MODERATION VARIABLES

This study aims to determine the effect of inflation, export-import, interest rates on sales in state-owned pharmaceutical holding companies with moderating variables of Gross Domestic Product (GDP). The type of research used is quantitative with primary and secondary data sources related to inflation, export-import, interest rates, GDP and sales. The data used is a combination of time series data for 2018-2022 and cross-section which is then referred to as panel data. The study was also conducted in more depth using a research instrument in the form of a questionnaire with respondents as many as six people who had positions as department heads in the parent company of Pharmaceutical SOEs. Data analysis techniques use multiple linear regression analysis and Moderating Regression Analysis. The results showed that simultaneously the variables of inflation, export-import and interest rates had a positive and significant effect on sales. Meanwhile, the moderation variable, namely GDP, partially affects sales, but cannot moderate the influence of inflation and export-import both in terms of strengthening and weakening the influence of the independent variable on the dependent variable. Other research results show GDP can be a pure moderator of the influence of interest rates on sales. This research has limitations, namely the variables used are macro, therefore for future research it is expected to be able to conduct research using micro variables in the economy.    Keywords: Inflation, Export-Import, Interest Rate, GDP, Sales and Holding Company of SOEs.

Re-Estimating Inflation Threshold Level for Tanzania

The study seeks to estimate the relationship between inflation and economic growth, as well as the headline inflation threshold level beyond or below which Tanzania’s economic growth is constrained. This was achieved through the Ordinary Least Squares (OLS) regressions employing quarterly data spanning the period 2001:1 to 2021:4. The findings suggest that the coefficient of inflation variable that captures the effect of low inflation on growth is statistically significant and positive, implying that low inflation is pro-growth. One percent increase in inflation leads to an economic growth of 0.352 percent. Furthermore, the coefficient of the high inflation proxy variable has a negative sign with the inflation threshold level being seven percent. At this level, the total effect of inflation on growth is estimated at 0.3494 percent.  Moreover, optimal inflation levels of one to three percent have no impact on growth, as mirrored by invariable adjusted R2.The recommendations from the results of this study are three-fold. First, the Bank of Tanzania may consider inflation targets below seven percent but above three percent in the monetary policy planning to continue supporting economic growth. Second, since the Bank has largely depended on inflation behaviour in informing inflation targets to choose, which ended into picking targets far from the optimal inflation, it is essential that the Bank also benefits from empirically estimated threshold rates. Third, in order to utilize any new information emanating from structural changes and developments in the economy, inflation threshold level should be re-estimated regularly.

Construction Price Index Prediction through ARMA with Inflation Effect: Case of Thailand Construction Industry

Over-budgeting due to inflation is a common phenomenon in the construction industry of both developed and developing countries. Inflation, with time changes, leaves an adverse effect on the project budget. Hence, this study aims to focus on the construction price index (CPI) behavior and inspect its correlation with inflation in Thailand’s construction industry as there has not been much work performed. The prediction of CPI was made from 2024 to 2028, relying on the data set from 2000 to 2023. The relationship between inflation and CPI categories helps in prediction by considering inflation as the independent variable and CPI (All Commodities, Lumber and Wood Products, Cement, and Iron Products) as the dependent variable that was incorporated in EViews to perform automated ARIMA forecasting. The correlation results show that out of four CPI, only Iron Products showed a significant relationship with inflation. For All Commodities, Lumber, and Wood Products, the predicted values were fluctuating, while for Cement and Iron Products, a clear seasonal pattern was observed. This prediction gives a direction to construction industry practitioners to make necessary adjustments to their budget estimation before signing the contract to overcome cost overrun obstruction.

Navigating retail inflation in Brazil: A machine learning and web scraping approach to the basic food basket

In response to the escalating challenges of global inflation, particularly in developing countries like Brazil, this study combines web scraping and machine learning to analyze inflation dynamics within the retail sector. By systematically real-time pricing and product data from a sponsor company and its four main competitors, we focus on Brazil's most consumed staple foods—beans, rice, sugar, and coffee. Our analysis reveals critical insights into how inflation impacts consumer choices and supply chain operations, highlighting the effectiveness of this approach in providing strategic solutions for managing retail sectors under economic stress. The findings highlight the effectiveness of this approach in providing strategic solutions for managing retail sectors under economic stress. Notably, we observed a 400% increase in sales volume for beans following a 50% price reduction and discovered coffee's price stability as a competitive advantage. Additionally, managerial insights emphasize the importance of diversified sourcing and strategic inventory management to mitigate the adverse effects of inflation.

Persistence analysis of the real estate US index and major cities

This paper analyses the stochastic properties of the US real estate market in the long term (1987–2023). For this purpose, we rely on fractionally integrated methods to fill the gap left by studies focusing on possible cointegration that use linear unit root tests. Both original and log transformed data of house price indices have been used with and without taking inflation into account. Even though several studies mentioned mean reversion in the short term, in the long term the real estate market shows a clear pattern of high persistence and no reversion to the mean. The effect of inflation seems to add correlation to real prices and conversely, an increase in the integration factor. Structural breaks reveal that recent values of this integration factor are greater, thus prices are becoming more persistent.

The Effect of Liquidity, Leverage, Efficiency, and Inflation on Financial Performance

This research investigates the influence of liquidity, leverage, total asset turnover ratio, and inflation on the financial performance of food and beverage companies listed on the Indonesia Stock Exchange from 2018 to 2022. Using a quantitative research method with secondary data and a purposive sampling method, 19 companies were selected for analysis. The research employed panel data analysis combining time series and cross-sectional data. The findings reveal that collectively, variables such as current ratio, debt to equity ratio, total asset turnover ratio, debt to total asset ratio, and inflation significantly impact financial performance. However, when examined individually, the current ratio and debt to total asset ratio show a negative and insignificant influence, while the debt to equity ratio displays a positive yet insignificant effect. Conversely, the total asset turnover ratio and inflation demonstrate a positive and significant impact on financial performance. This research underscores the managerial implications concerning the importance of monitoring specific financial ratios in decision-making processes, particularly in managing liquidity and asset efficiency. Managers are advised to consider inflation factors in financial planning and decision-making to optimize financial performance.

Understanding Global Commodity Price Shocks on Exchange Rates and Inflation in Emerging Economies: ARDL Perspective

Aims: To analyze the changing relationship between commodity prices (cocoa, diesel, gold, oil, petrol) and macroeconomic factors (exchange rate and inflation) in Ghana and differentiate between long-term and short-term effects.
 Study Design: Quantitative Design with Time series analysis using the Autoregressive Distributed Lag (ARDL) technique.
 Methodology: The study utilized cointegration and Error Correction Model in econometric estimation. Time series data for commodity prices and macroeconomic factors were collected for the period 2003M01 to 2023M10. The ARDL technique was applied to differentiate between long-term and short-term effects of inflation and exchange rates.
 Results: The short-run and long-run results indicate a positive relationship between commodity prices and inflation and exchange rates. A 1% increase in diesel prices is associated with a 0.23% appreciation in Ghana's currency in the short run (p=0.019) and a 1.76% rise in inflation in the long run (p=0.012). Past inflation has a dominant influence on current inflation, with a 1 percentage point increase in the previous year's inflation leading to a 0.45 percentage point increase in the current inflation rate.
 Conclusion:  Policymakers should prioritize stabilizing diesel prices, invest in storage facilities, promote alternative energy sources, strengthen domestic production and distribution of essential commodities, and adopt targeted monetary and fiscal policies to anchor inflationary expectations and address inflation inertia in Ghana.

Macroeconomic Dynamics in the Greek Economy during the Pre- and Post-Euro Adoption Periods

This study examines the relationships between Greek macroeconomic variables, examining before and after the euro’s introduction as a currency. We conducted an extensive analysis from 1980 to 2019, examining various economic indicators such as government expenditure, unemployment rates, taxation, inflation, and national debt, employing causal and correlation analysis and econometric modeling with and without time-varying effects. The results revealed a significant correlation between the introduction of the euro and a tighter relationship between government spending and unemployment levels, while one more remarkable point was that higher government spending or debt reduction initiatives appeared to positively impact joblessness, particularly in the context of the euro. Our research underscored the correlation between national debt and government spending as increased debt led to reduced government expenditure and vice versa. Unemployment cited an increased impact on government spending right after the euro adoption, and on the other hand, the effect of unemployment on government spending decreased. The debt–government spending nexus was decreasing for many years before the euro adoption, while just before the euro adoption, the relationship between debt and government spending was rather stable. Finally, during the euro adoption, the effect of inflation on tax increased, while the corresponding inflation tax remained stable. Our findings have significant implications for policymakers shaping the economic strategies in Greece as they point out the necessity for stable and balanced approaches that manage government spending and debt to address unemployment effectively.

A case study of the impact of carbon emissions and inflation on nonlinear dense neutrosophic fuzzy inventory system of varying demand with delayed deterioration

In a comprehensive consensus, human should reduce the carbon emission on the way to reduce the adverse effect of global warming. Manufacturing firms contributes significant amount of carbon emissions in the environment. In many countries, regulatory authorities are taking actions to reduce emissions. Thus, in this paper we have analysed the effect of carbon emissionfor non-instantaneous deteriorating items having advertisement and price dependent demand. The paper also focused on the effect of inflation where shortages are partially backlogged and partially lost in sales. In this paper a new concept of non-linear triangular dense neutrosophic number with its basic properties are developed. Further the classifications of symmetry, asymmetry is introduced and thereafter De-neutrosophication technique has been applied for crispification. Since the effect of some parameters like carbon emissions, advertising, and inflation are uncertain so we have considered it in this new aforesaid form to grab the uncertain characters of the underlying parameters. The classification of the uncertain parameter based on the symmetric and asymmetric nature and linear-nonlinear nature of triangular dense neutrosophic number have been also investigated here. Additionally, the effect of the model is examined under different situations for both linear and non-linear triangular dense fuzzy, dense intuitionistic, dense neutrosophic. Finally, a numerical example is considered to illustrate the model and it is observed that the model is optimum when the parameters are considered in Asymmetric Convex Non-Linear number for shorter replenishment cycle. Also, comparative study has been done by performing sensitivity analysis through the case study and provides managerial insight into this outcome.

Exposure and preparedness for wartime inflation in the EU: Retrospective cluster analysis

AbstractThe impact of the Russian-Ukrainian war on energy prices contributed significantly to European price increases in 2022. The study aims to find a linkage between the performance of 24 EU countries during the energy inflation crisis and their preparedness, vulnerability or exposure. The verified hypotheses reflect on the role of initial conditions of countries and the one-year impact of energy inflation on their economic performance. The two-step analysis first creates six clusters of countries based on their energy, trade, financial and political vulnerability, and preparedness indicators. The second step is to explore the shifts of clusters in expectations on macroeconomic indicators. Specific patterns of country groups are explored in the value and evolution of wartime indicators of inflation, GDP growth, consumer and business confidence, as well as FX volatility. The exploration concludes that the entry variables of clustering are relevant, and the EU countries can be segmented by dependency, energy, financial, and political aspects. Thus, it is possible to verify the distance in risk and exposure among EU economies. The impact variables demonstrated that the extent of the inflationary effect depended on the initial conditions. In addition, the research identified protective short-term factors against energy inflation originating in a trade and war context.

THE EFFECT OF CRUDE OIL PRICE VOLATILITY ON INFLATION IN INDIA: EVIDENCE FROM ARDL APPROACH

India has been experiencing the issue of rising crude oil prices since 2017, after a low-price regime from 2014 to 2017. Inflation was also moderate during the low-crude oil price regime. It has been empirically seen that a rise in crude oil prices exerts a significant impact on the inflationary situation of the nation. Rising oil prices and their spillover into higher general price levels might exacerbate the crisis in a nation that is already struggling with the declining demand for investment and consumption. The domestic oil price needs to be controlled by the government to boost demand while controlling inflation without putting further stress on the populace. Against this background, the present research aims to investigate the relationship between the crude oil price and the inflation rate in the nation using the data from 1991 to 2020 (before Covid years). This paper also aims to investigate the effect of crude oil prices and inflation on economic growth in India. The paper has used an Autoregressive Distributed lag model to investigate the long-run and short-run association between them. Our analysis shows that the prices of crude oil have a statistically significant impact on India’s inflation rate over the long and short terms. KEYWORDS: Inflation, Crude oil price, India, Spillover, ARDL, Granger Causality, GDP

Monetary policy in a Schumpeterian economy with endogenous fertility and human capital accumulation

This study investigates the growth and welfare effects of monetary policy in a Schumpeterian economy featuring cash-in-advance (CIA) constraints and two engines of growth: innovation from R&D and human capital accumulation from endogenous fertility. Our theoretical analysis considers the cases of various CIA constraints. When the CIA constraint is only on consumption, higher inflation retards economic growth by weakening human capital accumulation. When the CIA constraint is only on R&D, higher inflation would generate a negative or U-shaped effect on economic growth, depending on the interplay between inflationary effects on innovation and human capital accumulation. When the CIA constraint is only on manufacturing, the growth effect of inflation could be positive (negative) if the positive growth effect from technological progress dominates (is dominated by) the negative effect from human capital accumulation. Our quantitative analysis finds a generally negative inflation-growth relationship in the calibrated economy. Moreover, the welfare effect of inflation is also negative, implying that the Friedman rule is optimal.

Effect of conventional and unconventional monetary policy shocks on housing prices in Canada

This paper investigates the relative importance and effect of conventional and unconventional Canadian monetary policy surprises on housing prices. Using a credible approach to identify structural monetary policy shocks in Canada and a comprehensive Bayesian VAR model to analyze their effects on financial and macroeconomic variables, we find that both conventional monetary policy and quantitative easing shocks have a significant and persistent effect on housing prices in Canada. However, the inflationary effect of a quantitative easing shock is more pronounced than that of an easing target monetary policy surprise. Specifically, the peak effect of a 25-basis point expansionary conventional monetary policy shock is a 2.30% increase in real housing prices while a comparable quantitative easing surprise leads to a peak of 4.56% increase in real housing prices. We conclude that expansionary monetary policy in various forms has had significant inflationary effects on Canadian housing prices. But quantitative easing surprises stand out as the most prominent contributory factor to the escalating Canadian real estate price. Quantitative easing impact consistently outweighs the effects of forward guidance and conventional monetary policy shocks.

The Effect of Risk Disclosure on Investment Efficiency: An Applied Study

The purpose of the research: This study aims to investigate the effect of corporate risk disclosure (RD) on investment efficiency in the Egyptian environment. Data and materials and methodology: The researcher conducts an applied study using a sample of 376 firm-year observation from Egyptian firms listed on EGX100 after excluding the banking sector and insurance companies due to their special accounting nature in the time period 2017-2022 in order to avoid the negative effects of inflation in the Egyptian market. The researcher uses content analysis to calculate a risk disclosure index (RDI) from annual reports and studies how it impacts the efficiency of investment in companies. Results: The results demonstrated a significant positive effect of RD on investment efficiency, where RD decreases the underinvestment and increases the overinvestment which leads in sum to more investment efficiency. These results are consistent with some of the theories and previous studies that confirmed the role of RD in enhancing investment efficiency. Keywords: Risk disclosure- Investment Efficiency- Overinvestment- Underinvestment.

Inflasi dan Realisasi Pembiayaan Kepemilikan Rumah pada Bank Umum Syariah di Indonesia: Peran Pandemi Covid-19 Sebagai Pemoderasi

This study aims to estimate the realization of home ownership financing at Islamic commercial banks in Indonesia. Yield rate, inflation, and the Covid-19 pandemic are operationalized as predictor variables. In addition, the pandemic is also positioned as a moderating variable between the financing and yield rate, and inflation. Using monthly data for the period June 2014-February 2021, the analytical model used is multiple regression and moderated regression analysis (MRA). The study found that the yield rate and inflation had a negative and significant effect on the financing of home ownership. In contrast, the COVID-19 pandemic has no effect on financing, but this pandemic weakens the negative effect of inflation on home ownership financing

FOOD IMPORT, FOOD PRICE INFLATION, WAGES AND AGRICULTURAL EMPLOYMENT IN SOUTH AFRICA

Agricultural industry plays a significant role in the South African economy, specifically in creating jobs. However, this sector is facing significant challenges owing to economic and social unrest. Within the application of both Autoregressive Distributed Lag (ARDL) and Error Correction Model (ECM) on time series data from 2010q1 to 2021q4; this paper assessed the effects of food imports, inflation, and real wage on agricultural employment in South Africa. The results from bounds testing indicated that food imports, inflation and real wage stimulate longterm disruptions in agricultural employment. However, short-run results indicated that agricultural employment is only affected by the real wage. Based on these findings, this study suggests a policy that incorporation of both inflation rate and real wages policy to improve employment in the agricultural industry. Additionally, easing the import of food products that are complements to domestic agricultural products should be another strategy to increase the number of people employed in the agricultural industry.

Effect of Inflation, Rupiah Exchange, Dow Jones Index, Nasdaq Index, and S & P500 Index Against Combined Stock Price Index

This research aims to determine empirical evidence of the influence of inflation, Rupiah exchange rate, Dow Jones index, Nasdaq index, A & P500 index on the Composite Stock Price Index. The research uses quantitative methods and uses classical assumption tests, multiple regression analysis, and hypothesis testing. The data used is secondary data during the period January 2019 – November 2023, resulting in a total of 59 samples from each variable using the purposive sampling method. The research results show that inflation has an effect on the Composite Stock Price Index, the Rupiah exchange rate has no effect on the Composite Stock Price Index, the Dow Jones Index has an effect on the Stock Price Index Combined, the Nasdaq Index influences the Composite Stock Price Index, the S & P500 Index influences the Composite Stock Price Index, and Inflation, the Rupiah Exchange Rate, the Dow Jones Index, the Nasdaq Index, and the S & P500 Index simultaneously influence the Composite Stock Price Index.