We show empirically that survey-based measures of expected inflation are significant and strong predictors of future aggregate stock returns in several industrialized countries both in-sample and out-of-sample. By empirically discriminating between competing sources of this return predictability...

This paper analyses the influence of exchange rate expectations on the demand for real balances. It is shown that currency substitution is an important factor in explaining real money holdings in Germany from 1970 to 1978. Additionally, evidence is provided concerning the influence of the...