Advanced Search
MyIDEAS: Login

Inflation and corporate investment – a critical survey

Contents:

Author Info

  • Piotr Ciżkowicz

    ()
    (Warsaw School of Economics
    Ernst&Young Poland)

  • Marcin Hołda

    ()
    (National Bank of Poland, Economic Institute
    Warsaw School of Economics)

  • Andrzej Rzońca

    ()
    (National Bank of Poland, Monetary Policy Council
    Civil Development Forum)

Abstract

The analysis of inflation’s effect on investment can contribute to a deeper understanding of the benefits of a monetary policy oriented towards price stability. It can also help conduct such a policy effectively. We begin with a review of conclusions about the inflation-investment relationship that can be drawn from traditional monetary models with exogenous growth and no market imperfections. As these conclusions are ambiguous, models of this type could lead economic decision-makers to fail to take proper account of inflation’s impact on investment. We then survey research which, contrary to monetary exogenous growth models, takes account of market imperfections such as the asymmetry of information, uncertainty and nominal rigidities in the tax system. The analysis of the significance of these imperfections for the direction and magnitude of the relationship between inflation and investment forms the bulk of the article. We highlight, on the one hand, the key assumptions of the particular theories (and whether they are in keeping with stylized facts), and, on the other hand, the difficulties that empirical research faces when trying to verify the conclusions from these theories. Finally, we offer some conclusions on the basis of the conducted survey.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.bankikredyt.nbp.pl/content/2010/06/bik_06_2010_01_art.pdf
Download Restriction: no

Bibliographic Info

Article provided by National Bank of Poland, Economic Institute in its journal Bank i Kredyt.

Volume (Year): 41 (2010)
Issue (Month): 6 ()
Pages: 5-44

as in new window
Handle: RePEc:nbp:nbpbik:v:41:y:2010:i:6:p:5-44

Contact details of provider:
Postal: 00-919 Warszawa ul. Świętokrzyska 11/21
Phone: (0-22) 653 10 00
Fax: (0-22) 620 85 18
Web page: http://www.bankikredyt.nbp.pl/menu_en.aspx
More information through EDIRC

Related research

Keywords: investment; inflation; monetary growth models; asymmetry of information; uncertainty; taxes;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Christopher F Baum & Mustafa Caglayan & Neslihan Ozkan, 2004. "The second moments matter: The response of bank lending behavior to macroeconomic uncertainty," Computing in Economics and Finance 2004 172, Society for Computational Economics.
  2. von Kalckreuth, Ulf, 2000. "Exploring the role of uncertainty for corporate investment decisions in Germany," Discussion Paper Series 1: Economic Studies 2000,05, Deutsche Bundesbank, Research Centre.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Ciżkowicz, Piotr & Rzońca, Andrzej, 2013. "Does inflation harm corporate investment? Empirical evidence from OECD countries," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 7(16), pages 1-38.
  2. Ciżkowicz, Piotr & Rzońca, Andrzej, 2010. "Inflation and corporate investment in selected OECD countries in the years 1960-2005 – an empirical analysis," MPRA Paper 29846, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbp:nbpbik:v:41:y:2010:i:6:p:5-44. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sylwia Roszkowska).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.