Inflation, Uncertainty, and Investment

198650 citationsJournal Article

Authors

Richard S. Ruback · Roberts Wesleyan College

Abstract

ABSTRACT This paper investigates the effect of inflation on a firm's investments in fixed assets. When future prices are certain, inflation affects the present value of depreciation tax shields, and the impact of inflation on the choice between different lived assets is nonmonotonic. Future asset price uncertainty creates a valuable switching option and benefits shorter‐lived assets.

Topics & Keywords

Capital Investment and Risk Analysis Financial Reporting and Valuation Research Climate Change Policy and Economics

UN Sustainable Development Goals

Decent work and economic growth

Publication Details

Published in: The Journal of Finance

Volume 41, Issue 3, pp. 657-668

DOI: 10.1111/j.1540-6261.1986.tb04528.x

Field-Weighted Citation Impact: 0.71