Title

The Cross-Sectional Effect of Inflation on Corporate Investment and Employment

Publication Type

Journal Article

Publication Date

1993

Abstract

This paper examines the cross-sectional effect of inflation on the investment and employment decisions. The paper shows that more heavily capitalized firms tend to have a greater reduction in the capital-labor ratio during an inflationary period. The paper also shows that firms with a higher cost of debt to wage ratios and a larger amount of depreciation shelter tend to use more labor in the inflationary period. Empirical results are generally consistent with these arguments.

Discipline

Business

Research Areas

Quantitative Finance

Publication

Review of Quantitative Finance and Accounting

Volume

3

Issue

2

First Page

203

Last Page

220

ISSN

0924-865X

Identifier

10.1007/bf02407006