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Inflation and Financial Market Performance


In this paper we investigate the empirical association between inflation and the functioning of an economy's financial system. We find substantial evidence that inflation is negatively correlated with financial market performance, and, in addition, we find that the relationship between inflation and financial development exhibits significant non-linearities.


Suggested citation: Boyd, John, Ross Levine, and Bruce Smith, 1996. “Inflation and Financial Market Performance,” Federal Reserve Bank of Cleveland, Working Paper no. 96-17.

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