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- Title
STOCK RETURNS AND INFLATION IN FIJI.
- Authors
Sami, Janesh
- Abstract
The relationship between stock returns and inflation has important implications for monetary policy and stock market investment and has attracted growing attention from scholars over recent years. Despite this, the empirical evidence so far has been inconclusive. The main objective of this paper is to investigate the impact of inflation on stock returns in the developing stock market of Fiji. We examine the impact of inflation on stock market returns within the GARCH and EGARCH modelling framework using monthly data from 2000:02 to 2018:06 and find that inflation negatively affects stock market returns. Our results indicate the importance of ensuring price stability and suggest that stock market investment will not help hedge against inflation in Fiji. The results suggest that Fiji's stock market is likely to react more negatively to inflation in response to countercyclical monetary policy and emphasize the significance of portfolio diversification.
- Subjects
RATE of return on stocks; MONETARY policy; PRICE regulation; GARCH model; PRICE inflation; PORTFOLIO diversification
- Publication
International Journal of Business & Society, 2024, Vol 25, Issue 2, p426
- ISSN
1511-6670
- Publication type
Article
- DOI
10.33736/ijbs.7587.2024