Stock-Returns and Inflation in a Principal-Agent Economy

Boyan Jovanovic () and Masako Ueda

Working Papers from C.V. Starr Center for Applied Economics, New York University

Abstract: We study a monetary in which final goods sell on spot markets, while labor and dividends sell through contracts. Firms and workers confuse absolute and relative price changes: A positive price-level shock makes sellers think they are producing better goods than they really are. They split this apparent windfall with workers who get a higher real wage. Hence, unexpected inflation shifts real income from firms (the principals) to workers (the agents) and thereby lowers stock-returns.

Keywords: MONEY SUPPLY; PRICES; STOCKS (search for similar items in EconPapers)
JEL-codes: E43 E51 (search for similar items in EconPapers)
Pages: 26 pages
Date: 1998
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Stock-Returns and Inflation in a Principal-Agent Economy (1998)
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:cvs:starer:98-15

Ordering information: This working paper can be ordered from
C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012

Access Statistics for this paper

More papers in Working Papers from C.V. Starr Center for Applied Economics, New York University C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012. Contact information at EDIRC.
Bibliographic data for series maintained by Anne Stubing ( this e-mail address is bad, please contact ).