Stock-returns and inflation in a principal-agent economy

Article Abstract:

A novel monetary framework was developed in an attempt to provide an alternative means of discarding the harmful economic effects of inflation. The proposed model, based on the assumption that inflation creates an indirect relationship with stock-returns, centers on the use of contracts to mediate labor and stock markets. The approach primarily aims to create a positive price-level shock among firms and workers, which may in turn, trigger the redistribution of income from the principal to the agent, thereby lowering stock returns. These conditions would not only enhance the production output of workers, but impede the formation of inflationary pressures, as well.

Prices, Stocks & Other Equity Securities, Stocks, Monetary policy

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Cointegration test of the monetary theory of inflation and forecasting accuracy of the univariate and vector ARMA models of inflation

Article Abstract:

The inflation forecasting accuracy of time series models is examined by applying cointegration tests on the monetary theory of inflation. The study focuses on the efficacy of AutoRegressive Moving Average models of inflation. Application studies on Pakistan's inflationary stature reveal no cointegrating relation among consumer price index, money supply and output. Studies also reveal that money supply growth does not lead to inflation.

Inflation Accounting, Integration, Functional, Functional integration (Mathematics), Autoregression (Statistics), Time-series analysis, Time series analysis

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Capacity utilization

Article Abstract:

Capacity utilization is an accurate measure of business cycle fluctuations and inflationary pressures in the US industrial sector. The Federal Reserve, the agency that computes for this variable, uses capacity indexes as a basic method for capacity measurement. These indexes allow the people to analyze the inflationary process and understand the effects of shocks to aggregate demand.

Economic aspects, Industrial capacity

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