Working Paper
Inflation and relative price variability : durables vs. nondurables and services
Bishop, David G.; Golob, John E. (1997)
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, nondurable goods, and services. Consistent with previous research on relative price variability within aggregate consumption, we find inflation is positively correlated with relative price variability within both nondurables and services. In contrast, we find a negative correlation between inflation and ...
Research Working Paper , Paper 97-12

Working Paper
Do stock prices follow interest rates or inflation?
Bishop, David G.; Golob, John E. (1996)
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 valuations, because the spread between nominal interest rates and inflation has recently been above historic averages. That is, stock prices appear more overvalued when the earnings-price ratio is compared to nominal interest rates than when the earnings-price ratio is compared to inflation. Our result ...
Research Working Paper , Paper 96-13

Journal Article
What long-run returns can investors expect from the stock market?
Bishop, David G.; Golob, John E. (1997-07)
This article analyzes how macroeconomic fundamentals and high price-earnings ratios on stocks will affect long-run returns. The first section reviews the stock market's recent performance and describes how investors and analysts have reacted to this performance. The second section shows how macroeconomic trends imply that long-run returns will remain close to their 10 percent historical average. The third section analyzes the long-run relationship between price-earnings ratios and returns. The section shows that high price-earnings ratios are consistent with lower long-run returns, and argues ...
Economic Review , Volume 82 , Issue Q III , Pages 5-20