Estimated inflation rate, consumption and portfolio decision
Resource
Economics Letters,92(3),402-408.
Journal
Economics Letters
Journal Volume
92
Journal Issue
3
Pages
402-408
Date Issued
2006
Author(s)
Han, N.-W.
Abstract
When the expected inflation rate could not be completely observed by investors, we show two main results: (1) Both portfolio weights on financial assets and real consumption would be affected by the estimation error of unobservable inflation rate. (2) If there is only nominal instantaneously risk-free asset in the financial market, the change of nominal price would affect the optimal real consumptions plan. © 2006 Elsevier B.V. All rights reserved.
SDGs
Type
journal article