The effect of inflation on growth investments: A note

  • Clovis De Faro Fundação Getúlio Vargas
Keywords: inflation, no-reinvestment, BV

Abstract

Motivated by the pioneering work of Brenner and Venetia (1983), henceforth designated as BV, a previous note that focused attention on the effect of taxation on the optimal duration of investments in a non-inflationary environment (de Faro, 1996), the present note is aimed at investigating the effects of inflation on the optimal duration of investments. Specifically, considering the no-reinvestment case only, our objective is to include in the analysis both a numerical illustration of the peculiar results of BV as well as indexation procedures that have been used in some high inflation economies.

References

Brenner, Menachem and Itzak Venetia (1983). “The Effects of Inflation and Taxes on Growth Investment and Replacement Policies”, Journal of Finance, 38, pp. 1519-1528.

Faro, Clovis de (1996), “The Effect of Taxes on Growth Investments: A Note”, Revista de Análisis Económico, 11, pp. 139-142.

Fishlow, Albert (1974). “Indexing Brazilian Style: Inflation without Tears?”, Brookings Papers on Economic Activity, 1, pp. 261-280.

Hirshleifer, J. (1970). Investment, Interest and Capital, N. J., Prentice-Hall, Inc., Englewood Cliffs.

Holanda, Fernando (1993). “La indización de los activos financieros: la experiencia brasileña”, in L. F. Jiménez (ed.), Indización de activos financieros: experiencias latinoamericanas – Argentina, Brasil, Colombia, Chile y Uruguay, Proyecto conjunto CEPAL/ Gobierno de Holanda, SRV Impresos, Chile.

Simon, Carl P. and Lawrence Blume (1994). Mathematics for Economists, New York, W. W. Norton & Co., Inc.

Simonsen, Mario H. (1983). “Indexation: Current Theory and Brazilian Experience”, in Rudiger Dornbusch y M. H. Simonsen (eds.), Inflation, Debt and Indexation, The MIT Press.

Simonsen, Mario H. (1995). 30 Anos de Indexação, Brasil, Editora da Fundação Getulio Vargas.

Varian, Hal R. (1990). Intermediate Microeconomics: A Modern Approach, 2nd. ed., New York, W. W. Norton & Co., Inc.

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Published
01-01-1998
How to Cite
De FaroC. (1998). The effect of inflation on growth investments: A note. Estudios Económicos, 13(1), 81-91. https://doi.org/10.24201/ee.v13i1.239
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