Inflation and the Real Price of Equities: Theory with Some Empirical Evidence

摘要

This paper examines a channel of monetary transmission through the stock market. Theoretically, the model predicts an unambiguously negative relationship between money and real activity through the stock prices channel. Empirically, the evidence is in favor of a predominantly negative correlation between money and stock prices, mainly in the period prior to the 1980s. However, shocks to money have a transitory effect on stock prices.