Real Assets and Inflation: Which Real Assets Hedge Inflation

Rajan Parajuli and Sun Joseph Chang

No 205283, 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association

Abstract: Inflation is considered as a leading macroeconomic indicator, which might create substantial distortions in financial statements, future earnings, and overall performance of securities in the financial market. An inflation-hedging ability of an asset offers protection against inflation, which eliminates or at least reduces the uncertainty about the future real returns. Real assets like real estate, timberland, and farmland have been regarded as good inflation hedges, whereas financial assets like common stocks and bonds are considered as perverse hedges against inflation. Using the generalized Capital Asset Pricing Model (CAPM) to account for inflation, this study evaluates the inflation-hedging ability of several real assets. Consistent with the findings of previous studies, this study concludes that private-equity assets offer hedges against inflation to some extent, but stocks are found to be inferior hedges against inflation.

Keywords: Agricultural Finance; Financial Economics (search for similar items in EconPapers)
Pages: 15
Date: 2015
New Economics Papers: this item is included in nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://ageconsearch.umn.edu/record/205283/files/report-inflation%20hedges.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea15:205283

DOI: 10.22004/ag.econ.205283

Access Statistics for this paper

More papers in 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().