Inflation and Stock Market Returns in US: An Empirical Study (original) (raw)

2014

Abstract

This paper is effort to examine the impact of inflation on stock market returns for the period of May 2007 to November 2014 in USA. Monthly closing value of Nasdaq 100 index has been taken in this research paper to represent the monthly US stock market returns and monthly Consumer price index values to represent the inflation. In this paper, I have taken CPI monthly values as independent variable and stock index value as dependent variable and used one lag percentage differentials value by converting both the time series to analyze the nature of stationary. These tests examine both longrun and short-run dynamic relationships between the stock market returns and the rate of inflation. This paper found that there is positive but not much significant relationship between inflation and stock market returns in US.

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