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Quantifying the short- and long-run impact of inflation-related price volatility on knowledge asset investment

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  • Fan, Xuecheng
  • Xu, Zeshui
  • Qin, Yong
  • Škare, Marinko

Abstract

The study of the link between price volatility, measured in the inflation index, and knowledge asset investment is a topic under intense research. Knowledge asset investment is moving with inflation shocks (high synchronicity), particularly at the troughs and peaks of a business cycle. This research investigates the influence of inflation shocks on knowledge asset investment. Previous studies do not provide a piece of direct empirical evidence on the impact of inflation shocks on knowledge asset investment that is available. We employ panel structural vector autoregression to explore the short and long-run effects of inflation shocks on knowledge asset investment in 29 advanced economies from 1995 to 2019. Our empirical results prove a strong and statistically significant connection between knowledge asset investment and price volatility. In addition, we identify a robust empirical link between knowledge asset investment and the inflation index. The findings further indicate that the inflation index determines knowledge asset investment. Our work contributes to technology innovation, asset allocation, and price-level research to inspire novel research on knowledge asset investment.

Suggested Citation

  • Fan, Xuecheng & Xu, Zeshui & Qin, Yong & Škare, Marinko, 2023. "Quantifying the short- and long-run impact of inflation-related price volatility on knowledge asset investment," Journal of Business Research, Elsevier, vol. 165(C).
    • Handle: RePEc:eee:jbrese:v:165:y:2023:i:c:s014829632300406x
    DOI: 10.1016/j.jbusres.2023.114048
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