Inflation and the real price of equities: theory with some empirical evidence

Article Abstract:

The process of monetary transmissions through the stock market was studied in a general equilibrium model composed of a government, households and firms. It was posited that monetary policy will have a negative effect on real activity but that this effect could be explained as a substitution or an anticipated inflation. Data on nonborrowed reserves and the discount factor in capital gains in the 1980s were examined. It was discovered that the impact of nonborrowed reserves on stock prices were transitory and not long-run in nature.

Stocks, Inflation (Finance), Money, Capital stock, Inflation (Economics)

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Dynamic fiscal policy with regime-duration uncertainty: the tax-cut case

Article Abstract:

Government deficit policies and their effects on capital formation and welfare are analyzed using a life-cycle model. The results show that government deficits decrease capital formation. Results vary under various degrees of uncertainty. The actual policy implemented determines the effect. Government welfare is dependent on the level of uncertainty of an individual as well as the discounted welfare of future individuals.

Public Finance Activities, Fiscal Policy, Econometrics & Model Building, Analysis, Econometrics, Capital formation, Business models

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On perfect foresight and uncertainty in economic models: two monetary examples

Article Abstract:

A study was conducted to evaluate two monetary models on perfect foresight and uncertainty. The models set conditions such that bias arises when certainty is assumed despite indications of relative outcome uncertainty. Qulaitative results show that bias is conditioned by certain specific assumptions of the specified model. The application of the Lucas critique sets a quantitative basis for bias size.

Monetary policy

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