A transmission mechanism analysis of inflation's affecting stock returns

Abstract

This paper mainly analyzes transmission mechanism of inflation's affecting stock returns. And it shows that when inflation takes place, it will directly affect a country or region's macro-control policies, including money supply, interest rates, taxes and national debt. So, this paper, at the first time, describes transmission mechanism from the two aspects (monetary policy and fiscal policy), which directly impact on the stock market and stock prices. This resrearch also has an important practical significance to a number of macroeconomic policy-making. © 2012 Springer-Verlag GmbH.