Firms' Asset Holdings and Inflation Expectations

Date
2018-04-10
Authors
Kumar, S
Supervisor
Item type
Journal Article
Degree name
Journal Title
Journal ISSN
Volume Title
Publisher
Elsevier
Abstract

This paper investigates the relationship between firms’ inflation expectations and their holdings of liquid assets. We implement a new quantitative survey of firms’ expectations about inflation in New Zealand. We find that firms that hold more shares of liquid assets systematically report lower inflation expectations. Moreover, we implement an experiment by providing firms new exogenous information about recent inflation dynamics. This experiment allows us to assess how firms respond to new information in terms of belief revisions and firm-level decisions.

Description
Keywords
Liquid assets; Illiquid assets; Expectations; Survey; Inattention
Source
Journal of Economic Behavior & Organization, 170, 193-205.
Rights statement
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