Market analysts often forecast changes in stock prices by comparing earnings-price ratios on stocks to nominal interest rates. This paper shows that stock prices have followed inflation more closely than interest rates over the last thirty years. This result has implications for recent stock...

Many researchers find a positive relationship between inflation and the variability of relative prices within aggregate price indices. This paper looks at the relationship between inflation and the variability of relative prices for three categories of the consumption deflator: durable goods,...

Intertemporal optimization models of the macroeconomy are consistent with several features of the business cycle, and these models have become familiar tools for analyzing economic cycles and the propagation of economic shocks. Critics of this dynamic equilibrium approach have pointed out,...