Predictive Link in Asset, Prices and Inflation

Change in asset and consumer prices have steady but vital impact on inflation. The relationship has been in the limelight again in the last decade. In many countries like Japan and UK, constant rise in asset prices brings inflation in the consumer market. It is very important to keep consumer prices in control to keep asset prices stagnant even in short period of time; at least for an economic period. It seems important, therefore, to ascertain whether asset prices influence consumer prices in general, for a broader spectrum of countries. This research article has very brief and beautiful explanation of the concept with an example. Author choose a sample including major industrial countries as well as emerging markets, and test for the significance of housing prices and share prices in predicting inflations.
Author: Batavia, Bala, Nandakumar, Parameswaran, Wague, Cheick
Source: Indian Institute of Management Kozhikode