Ownership of Capital in Monetary Economies and the Inflation Tax on Equity
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Summary:
Financial instruments are subject to inflation taxes on the wealth they represent and on the nominal income flows they provide. This paper explicitly introduces financial instruments into the standard stochastic growth model with money and production and shows that the value of the firm in this case is equal to the firm’s capital stock divided by inflation. The resulting asset-pricing conditions indicate that the effect of inflation on asset returns differs from the effects found in other papers by the addition of a significant wealth tax.
Series:
Working Paper No. 1999/167
Subject:
Asset prices Financial instruments Inflation Stock markets Stocks
English
Publication Date:
December 1, 1999
ISBN/ISSN:
9781451858167/1018-5941
Stock No:
WPIEA1671999
Pages:
44
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