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Trefftzs Award: The Variation of the Return on Stocks in Periods of Inflation

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  • Oudet, Bruno A.

Abstract

The bear market of the late sixties amidst inflation has led to growing concern over the validity of the proposition that stocks provide a good hedge against inflation. Conflicting arguments have been raised on both sides of the issue but a synthesis has as yet failed to emerge. The gains resulting from a careful assessment of the various propositions are obvious. If stock prices are adversely affected by inflation, the financial analyst must search for other hedges against the erosion of the purchasing power of money, while the economist must note that inflation has a depressing effect on economic growth through the rise of the cost of capital.

Suggested Citation

  • Oudet, Bruno A., 1973. "Trefftzs Award: The Variation of the Return on Stocks in Periods of Inflation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 8(2), pages 247-258, March.
    • Handle: RePEc:cup:jfinqa:v:8:y:1973:i:02:p:247-258_01
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    Cited by:

    1. Robert Faff & Richard Heaney, 1999. "An examination of the relationship between Australian industry equity returns and expected inflation," Applied Economics, Taylor & Francis Journals, vol. 31(8), pages 915-933.
    2. Mohammad Hasan, 2008. "Stock returns, inflation and interest rates in the United Kingdom," The European Journal of Finance, Taylor & Francis Journals, vol. 14(8), pages 687-699.
    3. Jamie Alcock & Eva Steiner, 2017. "Unexpected Inflation, Capital Structure, and Real Risk-adjusted Firm Performance," Abacus, Accounting Foundation, University of Sydney, vol. 53(2), pages 273-298, June.
    4. Sinda Hadhri, 2023. "How does Bitcoin react to economic discomfort? Evidence from the economic misery index," Economics Bulletin, AccessEcon, vol. 43(3), pages 1235-1253.
    5. Pesce, Gabriela & Pedroni, Florencia Verónica, 2021. "Inflación y rendimientos en mercados emergentes: el caso de Argentina || Inflation and returns in emerging markets: the case of Argentina," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 32(1), pages 341-375, December.
    6. Blau, Benjamin M. & Griffith, Todd G. & Whitby, Ryan J., 2021. "Inflation and Bitcoin: A descriptive time-series analysis," Economics Letters, Elsevier, vol. 203(C).
    7. Nassar S. Al-Nassar & Razzaque H. Bhatti, 2019. "Are common stocks a hedge against inflation in emerging markets?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 43(3), pages 421-455, July.
    8. Bošnjak Mile & Novak Ivan & Bašić Maja, 2021. "Capital Market Returns and Inflation Nexus in Croatia: Wavelet Coherence Analysis," Business Systems Research, Sciendo, vol. 12(2), pages 253-267, December.
    9. Salisu, Afees A. & Ndako, Umar B. & Akanni, Lateef O., 2020. "New evidence for the inflation hedging potential of US stock returns," Finance Research Letters, Elsevier, vol. 37(C).
    10. Bampinas, Georgios & Panagiotidis, Theodore, 2016. "Hedging inflation with individual US stocks: A long-run portfolio analysis," The North American Journal of Economics and Finance, Elsevier, vol. 37(C), pages 374-392.
    11. Chang-Tesh Hsieh & Iskandar Hamwi & Tim Hudson, 2002. "An inflation-hedging portfolio selection model," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 8(1), pages 20-34, February.
    12. Ray Ball, 2024. "Accounting for Inflation: The Dog That Didn't Bark," Abacus, Accounting Foundation, University of Sydney, vol. 60(1), pages 1-12, March.
    13. Camba-Méndez, Gonzalo, 2020. "On the inflation risks embedded in sovereign bond yields," Working Paper Series 2423, European Central Bank.

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