Periods Of High Inflation Research Articles

Impact of Inflation Stock Market Returns

This research paper examines the impact of inflation on stock market returns, focusing on the Indian stock market. Utilizing a comprehensive methodological approach, we analyse the relationship between inflation and stock market performance through various quantitative techniques including trend analysis, regression analysis, histograms, growth percentage models, and descriptive statistics. The trend analysis reveals patterns and shifts in stock market returns in response to changing inflation rates. Regression analysis is employed to quantify the strength and nature of the relationship between inflation and stock market returns, providing insights into the degree to which inflationary pressures affect market performance. The findings of this study indicate a multifaceted relationship between inflation and stock market returns. While high inflation periods generally correlate with increased market volatility and lower returns, the impact varies across different sectors and economic conditions. Our analysis also includes the significance of monetary and fiscal policies in moderating the effects of inflation on the stock market. This research contributes valuable insights for investors, policymakers, and financial analysts, by having a detailed analysis of Inflation-Stock market study. The study's results can inform investment strategies and policy decisions aimed at mitigating the adverse effects of inflation on stock market performance and enhancing market resilience. The purpose of the study is to investigate he correlation, understand the investor behaviour and recommend the insights from the study.

Profit produced by post-pandemic inflation: Evidence from an emerging economy

This paper focuses on the post-pandemic inflationary context, providing further details on how rising corporate profits contribute to the inflationary process in Türkiye. Using quarterly data from 2010 to 2022, we extend the existing literature by employing the Quantile ARDL method to assess the roles that both cost-push and demand-pull factors play in post-pandemic inflation. The chosen empirical strategy is motivated by the main objective of the study, as it allows us to quantify how the factors contributing to inflationary process differ when comparing periods of high inflation (higher quantiles) with periods of low inflation (lower quantiles). The empirical findings support the idea that the drivers of Turkish inflation are context-dependent, with specific causes emerging during inflationary episodes. The results show that cost-push factors, rather than demand-pull factors, are the main cause of the post-pandemic inflation surge in Türkiye. Our estimation results show that the coefficient for interest rates in Türkiye is only -0.42 %, while the corresponding figure for the profit share is 5.26 %, indicating that the effect of the profit share is 12 times greater than that of interest rate. We also find evidence of conflict and profit-driven inflation, confirming that the post-pandemic inflation surge in Türkiye is largely driven by cost-push factors and rising profits.

Effectiveness of Fiscal and Economic Policy in Monitoring Inflation in Nigeria

This study investigates the effectiveness of monetary and fiscal policies in controlling inflation in Nigeria from 1993 to 2023. Using co-integration and error correction methods on yearly time series data, the study reveals several key findings. The unit root test indicates that only inflation (INF) is stationary at levels, while money supply (MS), taxation (TAX), and government expenditures (GEX) are stationary at first difference. The results show that an increase in the money supply and government expenditures lead to a rise in the inflation rate, whereas higher taxation reduces it. Based on these findings, the study concludes that MS, TAX, and GEX significantly impact on inflation in Nigeria. The study recommends that policymakers should better manage the money supply to reduce the inflation rate by decreasing the amount of money in the economy. Increasing the tax rates on individuals and companies, especially during periods of high inflation, can lower the amount of spendable money among citizens, thereby reducing inflation. Lastly, the government should control its expenditures to decrease the total amount of money in circulation, effectively reducing the country's inflation rate.

Fluctuations of BIST Sectoral Index Movements During High Inflation Periods: A Markov Regime Switching Analysis

Fluctuations of BIST Sectoral Index Movements During High Inflation Periods: A Markov Regime Switching Analysis

Price Monitoring, or Where Surveillance Studies Meets the Sociology of Price Formation

This essay stages an encounter between surveillance studies and the sociology of price and price formation. I argue that surveillance is integral to the calculative operations of retail price strategies, especially during periods of high inflation, and that these calculative operations hinge on the human infrastructure of a precarious data-collecting workforce. I present my argument through a case study of competitor price monitoring, a corporate surveillance practice in which commercial actors record, process, and transmit information on competitors’ pricing, inventory, and display strategies. While pricing intelligence services like web-scraping and dynamic pricing algorithms are typically applied in e-commerce settings, I focus here on a firm that specializes in the collection of brick-and-mortar retail price data, with special attention to the labor practices involved in the manual (in-person, device-aided) production of retail price information at the national-industrial scale. Building on auto-ethnographic observations as a price data collector as well as analysis of employee reviews of the firm on sites like Indeed and Glassdoor, I argue that surveillance studies can contribute in significant ways to our understanding of the material practices, and politics, of price and price formation.

Asymmetry in inflation persistence under inflation targeting

This study empirically documents that inflation is significantly more persistent when it is below the Central Bank’s target than otherwise, in five inflation targeting countries (Australia, New Zealand, Sweden, United States and the Euro-Area). We use a threshold autoregressive model to test for this asymmetry in inflation persistence; above and below some estimated threshold. We find that the threshold estimates are reasonable in light of a central bank’s announced inflation target. Theoretically, we postulate that this phenomenon occurs because while forming their expectations, agents pay attention to recent observations asymmetrically along the business cycle. It is shown that a New Keynesian model with adaptive learning and an adaptive gain can explain the asymmetry in inflation persistence. Due to relatively larger forecasting errors, agents tend to put more weight on recent events in periods of high inflation, forcing inflation persistence to deteriorate. Our empirical evidence supports the theoretical findings that inflationary periods are associated with larger forecasting errors.

Cross-Country Analysis of Inflation Experiences and Homeownership: A Qualitative Review

This qualitative literature review examines the relationship between inflation experiences and homeownership across countries. Drawing on a synthesis of existing research, the review explores how historical inflation contexts influence individuals' decisions to invest in real estate. Findings indicate that periods of high inflation often motivate individuals to view homeownership as a hedge against inflationary pressures, particularly in economies with volatile economic conditions. Institutional factors, such as mortgage market structures and housing policies, play a crucial role in shaping this relationship, influencing overall homeownership rates across different regions. Immigrant populations bring unique perspectives, as their housing decisions in host countries are influenced by inflation experiences in their countries of origin. The review highlights methodological diversity and calls for more longitudinal and cross-country studies to enhance the robustness and generalizability of findings. Addressing these dynamics can provide insights into effective policy interventions aimed at promoting sustainable housing markets globally.

Can higher federal funds rates control mortgage lending during periods of high inflation and high house prices?

The U.S. is facing higher inflation since December 2020 along with higher house prices. After a sharp increase, house prices have started to decline very recently even more drastically – reminding us of the global financial crisis 2007–08. Rather late, from December 2021 onwards, the Fed started to increase the Fed funds rate. However, it is unclear whether the Fed funds rate can control bank lending activities – especially, mortgage lending. Surprisingly, our results suggest that the Fed funds rate fails to control mortgage lending during high inflation and high house prices in the absence of bank reserve requirements.

Hedging Using Digital Currencies Against Inflation Risks In Light Of The Globalization Of Economic Activity: A Theoretical Study

This theoretical study explores the potential of digital currencies as a hedging tool against inflation risks in the context of globalized economic activity. With the increasing interconnectedness of economies and the volatility of traditional currencies, investors and businesses are seeking alternative ways to protect their wealth from the eroding effects of inflation. Digital currencies, with their unique characteristics such as decentralization and limited supply, have emerged as a potential solution. This research investigates the theoretical underpinnings of using digital currencies for inflation hedging, analyzing their correlation with traditional assets and their performance during periods of high inflation. By examining the factors influencing the effectiveness of digital currencies as a hedge, this study aims to provide insights for investors and policymakers seeking to navigate the complexities of the global economic landscape. Keywords: digital currencies, inflation hedging, globalization, economic activity, theoretical study

Comparative Analysis of Gold, Art, and Wheat as Inflation Hedges

This study confirms gold’s role as a reliable inflation hedge while introducing new insights into lesser-explored assets like art and wheat. Using advanced methodologies such as the ARDL framework and LSTM deep learning, it conducts a detailed analysis of inflation-hedging dynamics, exploring non-linear relationships and unexpected inflation impacts across various asset classes. The findings reveal complex dynamics. Gold demonstrates strong long-term inflation hedging potential. The negative coefficient for the US dollar index suggests that gold acts as a hedge against currency depreciation. Furthermore, a positive relationship between gold returns and inflation during high inflation periods highlights its effectiveness in protecting purchasing power. Art presents a more intricate picture. Long-term analysis suggests a weak mean-reverting tendency, but a negative relationship with inflation, potentially linked to economic downturns. Interestingly, unexpected inflation positively correlates with art returns in the long run, hinting at its potential inflation-hedging abilities. No statistically significant connection between wheat prices and overall inflation was observed; the short-run analysis reveals a dynamic interplay between inflation, real GDP growth, and wheat prices at different time points.

Radical pluralism, high inflation, and trust in historical context: the continued relevance of Fox in understanding UK public sector strikes

PurposeThe paper uses key themes from Fox’s writing to reflect on the wave of public sector industrial action that developed in the UK since the early 2020s: specifically the relevance of (1) radical pluralism, (2) historical context, (3) understanding the effects of high inflation and (4) (a breakdown of) trust relations.Design/methodology/approachThe paper draws primarily on evidence from broad public debate but is informed by discussions held with senior union leaders both for a research project and in delivering development training.FindingsRadical pluralism is used as a lens through which to understand declining trust in institutions of pluralist collective industrial relations in the UK public sector, arguing that current developments need to be understood in historical context. An analysis of the industrial action in the early 2020s highlights the ways that a period of high inflation can stress institutions of collective employment regulation, rendering visible the limits of conventional, pluralist industrial relations.Research limitations/implicationsThe paper could be extended by more detailed empirical data collection, both in the UK and other national institutional contexts.Practical implicationsUnions need to more consistently focus on issues of power. A stronger focus on power might identify the limitations of pluralist institutions of collective regulation and embed a commitment to building union influence to challenge those existing structures in favour of mechanisms to build workers' power more broadly.Social implicationsUnderstanding these disputes as, at least in part, being about the limits to and undermining of trust in collective institutions that regulate work and employment allows us to better understand the forces at play and potential outcomes of these disputes.Originality/valueThe paper makes three key contributions: first, applying Fox’s work in a practical way to contemporary UK industrial relations; second, extending his analyses to public sector industrial relations and third, arguing that power needs to be more centrally located within union objectives in order to reshape industrial relations to radical pluralist ends.

Mortgage choice and inflation experiences in the Eurozone

In the Eurozone, households’ mortgage preferences vary widely, both within and across countries. This persistent heterogeneity in the choice between an adjustable rate mortgage (ARM) and a fixed rate mortgage (FRM) two decades after introducing a common currency is a puzzle. We argue that these patterns relate to the long-lasting effect of personal experiences of high-inflation periods. Analysing rich household data across 9 countries, we show that higher lifetime experienced inflation predicts significantly lower probability of holding an FRM: a 1 log-point increase in experienced inflation predicts a 71% decrease in the odds of holding an FRM. We relate our findings to existing theories on household mortgage risk management and argue that Eurozone prepayment penalties heighten the ‘inflation risk’ associated with FRMs. We also find that past personal inflation experiences are associated to risk aversion: households with histories of high and volatile inflation report lower willingness to take financial risk.

Tail connectedness between category-specific policy uncertainty, sovereign debt risk, and stock volatility during a high inflation period

Greece has experienced high inflation, increased fiscal deficit and debt in recent years, and whether the Greek sovereign debt crisis will resurrect has triggered widespread discussion. This study explores the tail connectedness between category-specific economic policy uncertainty (EPUs), sovereign debt risk (SR), and stock volatility in Greece using a connectedness method based on the quantile VAR model. The findings show that (i) The total connectedness index (TCI) features a U-shaped structure that varies with the conditional quantiles of variables, demonstrating that the spillover effect under extreme conditions for variables is greater than under normal conditions; (ii) Under different market conditions, we observe an apparent heterogeneity in the magnitude of category-specific EPUs' effects on the SR; (iii) The Russia-Ukraine war and the COVID-19 pandemic both have a bigger effect on the TCI than other periods; (iv) SR has shifted from being a net spillover receiver in the median and left tail to a net spillover transmitter in the right tail.

Panel Data Analysis in Identifying and Mapping Caused Factors of Financial Crises and Monetary Instability in Developing Countries

This study aims to reveal the extent of macroeconomic instability, which has the characteristics of a financial crisis and inflation. To test the hypothesis, researchers use fixed effects and random effects estimators to assess the presence of individual and temporal effects. Macroeconomic fundamentals, especially the risk of devaluation and a drop in economic activity can be seen as early warning signs of banks becoming less solvent. They also play a big role in explaining how deposits changed during the crisis. Our findings highlight the unique features of the convertible monetary regime, reinforcing the belief that debtors will enjoy permanent protection against devaluation risks. This perception encourages the dollarization of bank portfolios, thereby increasing the financial system's solvency risks. There is also evidence that the regulatory framework in this area is weak when it comes to the financial system's exposure to devaluation risks and public debt risks. This is especially true when it comes to an institutional framework that makes it hard for government funding to be changed into other currencies. We find that inflation is a very persistent process during periods of high inflation. However, with the decline in inflation after the implementation of the convertibility regime, its persistence reduced significantly. The results show that non-rational persistence is currently not very high, suggesting that the costs of designing the economy should not be either. We find that univariate models tend to perform better over very short horizons. The results suggest that there may be advantages to using a combination of different models, provided they are informative about the relationship between inflation and its short- and long-run determinants.

Analyzing the Effects of Inflation on Consumer Purchasing Behavior in Emerging Markets

This article explores how inflation affects consumer purchasing behavior in emerging markets. Through a combination of qualitative and quantitative research methods, the study examines changes in spending habits, preferences for goods, and brand loyalty during periods of high inflation. The findings highlight the adaptive strategies consumers employ to manage their purchasing decisions and the implications for marketers in these economies.

New Zealand long-term equity returns and their determinants

We document several aspects of New Zealand's long-term equity returns over the 156 years from 1867 to 2022. Remaining invested in the market has been an effective strategy. Investors with a 5-year (20-year) horizon lost money just 10% (<1%) of the time in nominal terms. Equities outperformed bonds in periods of moderate and high inflation, although bonds generated superior returns in deflationary periods. Returns over 5- and 10-year horizons can be predicted with a three-component model based on the “Buffett indicator”.

Kondisi pasar Indonesia dalam isu inflasi nasional dan geopolitik global

In early 2022, changes in the inflation rate accompanied by global geopolitical issues became crucial information for the Indonesian capital market. At that time, inflation conditions in Indonesia began to creep up to reach a point of around 2%. This study aims to examine the market return performance of the LQ45 Index in the context of changes in the inflation rate and global geopolitical issues. Observations are carried out in 2 sub-periods: (1) 6 October 2021 to 30 December 2021 or the period with low inflation; and (2) January 3 2022 to March 31 2022 or a period with a high inflation rate. The findings of this study show that the highest market returns with low risk are in periods of high inflation and accompanied by global geopolitical issues. This period also produces a better risk-return trade-off. Other findings indicate that the market in both periods did not produce extraordinary returns even though it was in a weak form of inefficiency. Changes in the inflation rate accompanied by global geopolitical issues did not significantly change market returns.

Medical brain drain: A critical challenge to Pakistan's healthcare sector.

Madam, Medical brain drain describes a condition where highly skilled healthcare workers leave their country of origin to work overseas in search of better working conditions, higher pay, or more opportunities for career advancement leading to deprivation of medical professionals and a loss of expertise and talent (1). Unfortunately, the exodus of skilled individuals from Pakistan is jeopardises country's intellectual assets and demands immediate attention. Skilled healthcare workers shortage is worsening in Pakistan due to the high number of talented professionals migrating for better career opportunities in the foreign land. According to the Bureau of Emigration and Overseas Employment in 2022 alone, approximately 765,000 Pakistanis, including 2,500 physicians, left the country, highlighting the severity of the situation (2) The medical profession is highly regarded in Pakistan and attracts a significant number of people. Despite this, Pakistan is among the 57 countries that lack sufficient human health resources to fulfil its healthcare requirements and objectives. The country is confronted with a considerable discrepancy in the ratio of doctors to patients which stands at 1:1300, significantly below the ratio of 1:1000 recommended by the World Health Organization (WHO) (3) The degradation of the healthcare system, shortage of residency positions and lower salaries during a period of high inflation, coupled with cultural biases and undervaluation of professions like nursing have led to a shortage of healthcare staff. Moreover, societal expectations for women to prioritize their domestic duties contribute to the disproportionate number of female doctors leaving the medical field. This further burdens the healthcare system by increasing the workload for the remaining healthcare professionals (4) Brain drain hampers economic growth and innovation by robbing the nation of its skilled professionals and their expertise. This issue can be addressed by adopting a comprehensive approach such. Improving the healthcare infrastructure and working conditions, increasing residency positions and salaries and providing better job opportunities could help retain competent doctors. Encouraging research on brain drain can aid policymakers in developing tailored policies based on the country's needs. These measures can help Pakistan build a robust healthcare system and provide quality medical services to its people.

The Federal Reserve’s responses to the post-Covid period of high inflation

In the face of the COVID-19 pandemic in March 2020, the Federal Reserve committed to using its full range of tools to support the U.S. economy. Over the next year and a half, with progress on vaccinations and strong policy support, indicators of economic activity and employment strengthened while inflation moved higher. Faced with a tight labor market and elevated inflation, the Federal Open Market Committee (FOMC) began a process of unwinding the very accommodative stance of monetary policy and moving to a restrictive policy stance to address inflation pressures. Here we review the sequence of actions taken by the Committee between late 2020 and mid-2023 as well as discuss some issues it contemplated along the way; the table provides a chronological list of key events over this period.

Peculiarities of financial dollarization during martial law: case of Ukraine

The article evaluates the peculiarities of banking sector dollarization in Ukraine with the use of econometric tools and a systems approach, conducts a scenario analysis for dollarization dynamics during martial law, and develops a framework for recommendations with the consideration of long-term financial stability goals.The study finds that the inflation-targeting regime has gradually reduced the dollarization of loans and deposits, but levels remain high. During the full-scale invasion of Russia in Ukraine, the record-low levels of dollarization and NBU restrictions prevented the rapid increase in dollarization as was previously observed during economic crises. The study also finds that loan dollarization is highly dependent on deposit dollarization and that economic agents tend to choose a more stable currency during periods of high inflation and exchange rate volatility. The scenario analysis forecasts that deposit dollarization will continue to grow during the crisis period and high uncertainty, while loan dollarization will stabilize on a new, higher level.To ensure financial stability on a long-term horizon, the de-dollarization strategy should include monetary policy, vertical development of the financial market, in particular, the development of the bonds market and alternative hryvnia instruments, as well as the use of macroprudential tools.&#x0D; JEL classification: E52, E58, E63, C30, C53