THE JOURNAL OF FINANCE • VOL. XXXI, NO.

2 • MAY 1976

COMMON STOCKS AS A HEDGE AGAINST INFLATION

ZVI BODIE*

I. INTRODUCTION

THIS PAPER DEFINES the effectiveness of common stocks as an inflation hedge as the
extent to which they can be used to reduce the risk of an investor's real return
which stems from uncertainty about the future level of the prices of consumption
goods.' Since there is one type of security whose real return is certain but for
inflation risk, namely single-period^, riskless-in-terms-of-default nominal bonds, it
seems appropriate to identify inflation risk with the variance of the real return on
such a bond. Accordingly, we measure the effectiveness of common stocks as ah
inflation hedge as the proportional reduction in that variance attainable by com-
bining a "representative" well-diversified portfolio of common stocks and the
nominal bond in their variance minimizing proportions.
It is worthwhile to indicate the relationship between this view of hedging against
inflation and the investor's ultimate objective of optimal portfolio selection. This
can best be done in the framework of the Markowitz-Tobin-mean-variance model
of portfolio choice.^
In that model the process of portfolio selection is divided into two separate
stages: (1) identification of the efficient portfolio frontier and (2) choosing the
optimal portfolio on that frontier. This paper focuses on one particular point on the
efficient frontier—the minimum variance portfolio. From this perspective hedging
against inflation is essentially the process of taking a risk-free-in-terms-of-default
nominal bond as the starting point and using other securities to eliminate as much
of the variance of its real return as possible.
We define the difference between the mean real return on a nominal bond and
the mean real return on the minimum variance portfolio as the "cost" of hedging

• Assistant Professor of Economics and Finance, Sloan School of Management, Massachusetts

Institute of Technology. I am grateful to Stanley Fischer and Robert Merton for their advice and many
helpful suggestions and to Boston University for financial support. An earlier draft of this paper was
greatly improved by the comments of John Lintner and Steven Shavell. Since writing this paper I have
become aware of the papers by Nelson (1975) and Jaffee and Mandelker (1975), which deal with one of
the issues discussed in this paper.
1. This paper ignores the ambiguities and difficulties involved in defining and measuring the general
price level. It assumes that the Bureau of Labor Statistics Consumer Price Index is an appropriate
measure.
2. The nominal bond is assumed to be a pure discount bond with a maturity equal to the length of the
holding period.
3. Originally formulated by Markowitz (1952), this model was thought to be consistent with expected
utility maximization only under very restrictive assumptions about either the stochastic specification or
the utility function. Recent work by Merton (1969, 1971) however, has shown that the mean-variance
model has validity for a broad class of stochastic specifications and utility functions when the trading
interval is sufficiently small.
459
460 The Journal of Finance

against inflation. Since the unhedged nominal bond does not in general lie on the
efficient portfolio frontier, the cost of hedging may be either positive or negative.
Of course, ours is not the only possible definition of the term hedging against
inflation or inflation hedge. Indeed, in the literature on common stocks and
inflation the term has been employed in two distinct ways, both of which differ
from the definition given above.
According to the first of these alternative definitions a security is an inflation
hedge if it offers "protection" against inflation, which in turn means the elimina-
tion or at least the reduction of the possibility that the real rate of return on the
security will fall below some specified "floor" value such as zero. This definition
has been made most explicit in the two papers by Reilly, Johnson and Smith (1970,
1971), and it is implicit in Cagan (1974).
In effect in order for common stocks to qualify as an inflation hedge under the
Reilly et al. definition they must be free of "downside" risk stemming from all
sources, not just from inflation. Considering the large variance associated with
equity returns, it is not at all surprising that these studies find that the nominal rate
of return on common stocks is often less than the rate of inflation.
The second alternative definition of the term inflation hedge as apphed to
common stocks can be expressed as follows: a security is an inflation hedge if and
only if its real return is independent of the rate of inflation. This is the definition
employed either explicitly or implicitly by Branch (1974), Fama and MacBeth
(1974), and Oudet (1973).
Economic theorists have long considered common stocks an inflation hedge in
this sense because stocks represent ownership of physical capital whose real value
is assumed to be independent of the rate of inflation."* This independence implies
that a ceteris paribus change in the rate of inflation should be accompanied by an
equal change in the nominal rate of return on equity. Indeed this view is most
commonly expressed in somewhat looser terms as a positive correlation between
the nominal rate of return on equity and the rate of inflation.
Strictly speaking, a zero correlation between the real rate of return on equity and
the rate of inflation implies that in a regression with the nominal rate of return on
equity as the left-hand variable, the coefficient of the rate of inflation should be 1.
It should be pointed out that the three definitions of inflation hedge dis-
tinguished above are not mutually exclusive. It is quite possible for a security to
qualify as a perfect inflation hedge in more than one sense, although the only
security which could conform to all three definitions would be one with a
completely riskless, non-negative real rate of return.
The primary purpose of this paper is to determine to what extent common stocks
are an inflation hedge in the first sense explained above. More specifically the
question dealt with here is to what extent an investor can reduce the uncertainty of
the real return on a nominal bond by combining it with a "representative"
well-diversified portfolio of common stocks. As a necessary by-product, the paper
also addresses the question of whether the real return on common stocks is or is
not correlated with the rate of inflation. Section II develops the relevant theory and
4. For a thorough review of the economics literature on this subject, see the Lintner (1973) article.
 Common Stocks as a Hedge against I/Ration 461

derives from it a quantitative measure of hedging effectiveness. Section III de-

scribes the empirical tests performed and reports the findings, and Section IV
summarizes the study and draws the major conclusions.

II. HEDGING NOMINAL BONDS AGAINST INFLATION

Let F(t) be the price level at time /, i.e., the nominal value at time / of some
standard basket of commodities. Let 1 -I- /-,(?) be the nominal one-period return per
dollar invested in security / at time t. Since the real end-of-period value of this
money return is 1 -I- ri(t)/F(t+ 1) baskets, the real return on security /, 1 + Ri(t), is
p(t)
\ + RM[\ + (t)W
where tildes (~) are used to denote random variables.
Suppose the security under consideration is a bond that matures at time t + 1 and
is free of default risk, so that its nominal return 1 -I- /•„(/), is known with certainty at
time t. Its real return, however, is uncertain at time /, sincejt depends on F(t+l).
Let D(t) stand for F(t)/P(t_+ l),_and let us decompose D(t) into its mean, D(t),
and deviation from its mean d(t). d(t) is the "unanticipated" proportional change
in the purchasing power of money, which with a negative sign in front of it would
be called unanticipated inflation. Suppressing the time subscripts, the real return on
a risk-free nominal bond can now be written as

or more simply
^ J (1)
Note that the risk-free nominal interest rate has no subscript in (1); this convention
is adopted throughout the remainder of the paper.
Now consider a second security, a representative portfolio of common stocks.
Let us also decompose its real return into its mean and deviation from the mean:

\ + R^=\ + R^-^l (2)

The deviation from the mean, I, can be further decomposed into two orthogonal
components as follows:
1=ad+ p,
where a = cov(e.,d)/va.T(d). (2) then becomes:
(3)
ad can be called the "inflation-risk" component of the real return on equity while ju
is the "non-inflation risk" component.
The question to be investigated is how effectively one can hedge against inflation
with the common stock portfolio. Operationally, the measure of risk employed is
462 The Journal of Finance

variance, and the question therefore becomes what is the maximum reduction in
the variance of the real return on nominal bonds attainable by combining them
with the equity portfolio.
Letting w be the proportion of equities in the composite inflation-hedged
portfolio, the real return on the portfolio is:

or by substituting from (1) and (3):

\ + R„ = \ + R„ + W{R^ -R„) + [\ + r-w(\ + r-a)]d+ w^i. (4)

Let a] be the variance of d, al the variance of jii, and a^ the variance of the real
return on the resulting inflation-hedged portfolio. From (4) we get:

al=[\ + r-w(\ + r-a)'fa]+w^(jl (5)

The value of w which minimizes a^ is:

(l + r)(l-hr-«)
(l + )V(|/?)
If a is negative, then the real return on equity is negatively correlated with the
unanticipated rate of change in purchasing power, or in more familiar terms,
positively correlated with unanticipated inflation. Equation (6) implies that w is
then positive, indicating that the hedger will be long in equity.
Even if a is positive, meaning that equity as well as nominal bonds is negatively
correlated with unanticipated infaltion, the hedger should take a long position in
equity if 1 H- /-> a, i.e., if equity has the smaller coefficient for the d term. However,
if 1 -f-r<a equity should be sold short. \l a=\ + r then w = 0, i.e., common stocks
would be useless as an inflation hedge.
Our measure of the effectiveness of the common stock portfolio as an inflation
hedge is the proportional reduction in the variance of the real return on nominal
bonds attainable by combining the two securities in the variance minimizing
proportions. The formula for this measure is:

S is inversely related to 02/01, which means that the greater the degree of
non-inflation risk in the real return on equity relative to the degree of uncertainty
about inflation, the less effective is equity as an inflation hedge. Equity would be a
perfect inflation hedge if its real return were perfectly correlated with unanticipated
inflation, i.e., if Oj were zero.
Equation (7) also tells us that S is positively related to the absolute value of the
difference between 1 -f r and a.
Finally as a measure of the "cost" of hedging we take the difference between the
 Common Stocks as a Hedge against Inflation 463

expected value of the real return on the nominal bond, \ + R^, and the expected
value of the real return on the minimum variance portfolio, \ + Rfj, which is:

E^w{R„-R,) (8)

The sign of E can be either positive or negative. Assuming that R^ > R„, the cost
of hedging will be positive if a > ( l -l-r) because in that event the hedger must sell
equity short. On the other hand, if Re> Rn and a<(l-l-r), the hedger can both
reduce the variance and increase the expected value of the real return on a nominal
bond by combining it with a positive amount of the equity portfolio.

III. EMPIRICAL FINDINGS

Having derived a formula for a measure of the effectiveness of equity as an

inflation hedge, the next obvious question is what is its present magnitude. The
purpose of this section is to try to answer that question by deriving estimates of the
relevant parameters. Of all the parameters discussed above the only one which is
directly observable is r, the nominal rate of interest, a, a,, and Oj are expectational
variables, or to be more exact, they are parameters of the investor's subjective
probabihty distribution. As in all other empirical studies involving subjective
probability distributions, this section assumes homogeneous expectations and
specifies the way these expectations are formed on the basis of the ex post historical
data.
The model presented in the preceding section showed that in each holding period
the following relationships hold:

+ A(O (9)
cov{d{t),tL{t)) = 0

In principle all the parameters of the model—R^, a, and Oj—could change from
period to period, but we will assume that at least a and Oj are stationary over the
sample period used in their estimation.
Three different specifications were tried in estimating equation (9):
= ao+a, J ( O + M(O (9a)

= )So+a,Z)(0 + M(0 (9b)

^ (9C)

(Note that the coefficient a of the previous section is now denoted by a,.)
Before discussing separately the estimates derived from each specification, let me
present some details, explanations and assumptions which relate to all three of
them.
464 The Journal of Finance

A serious practical difficulty which arises in the estimation of (9a) and (9c) is
tjiat in addition to the regression parameters, the historical values of the variable
D{t), the expected value of the index of purchasing power, are not observable. The
way I have chosen to deal with this problem is to assume that D evolves according
to the model of "adaptive expectations," which says that

D{t) = D{t-\) + e[D{t-\)-D{t-\)]

making the current D a function of past realized values of D{t).

I have constructed a set of ten artificial series to serve as D{t), corresponding to
values of ^ of .1, .2, .3, .4, .5, .6, .7, .8, .9, and 1.0, starting each series by setting
D{t) equal to D{t) in January 1926. I then used D{t)-D{t) as the proxy for the
unanticipated change in purchasing power, d{t).
All equations were estimated by ordinary least squares regression, and all
regressions and other calculations were done using holding periods of three
different lengths: 1 month, 3 months and 1 year. Unless otherwise stated, the
sample period used was January, 1953 to December, 1972.
The definitions of variables and data sources used are as follows:
1. D{t), the index of purchasing power, is the value of the Consumer Price index
(CPI) at the beginning of the holding period divided by its value at the end.
Source: Bureau of Labor Statistics
2. 1 + r{t), the risk-free nominal return, is the terminal value per dollar invested
in a Treasury Bill with a maturity equal to the length of the holding period.
Source: Salomon Bros., "Analytical Record of Yields & Spreads."
3. 1 + r^{t) is the terminal nominal return per dollar invested at time / which an
investor would have received had he followed a policy of buying and reinvesting all
receipts in equal dollar amounts of all NYSE common stocks at the beginning of
each month during the holding period.
Source: CRSP tape.
4. 1 + ^^(0 is \ + r^{t) multiplied by D{t). All returns are before taxes and
commissions.
A. Estimates Based on (9a)
Specification (9a) is:

Table 1 presents some regression results for a one year holding period for five
different values of 9, the speed of adjustment parameter used in generating the time
series for d{t).
These results strongly suggest that a, is positive. Since d is the unanticipated
change in purchasing power, a positive value of a, indicates that the real return on
equity is negatively correlated with unanticipated inflation.
The sizes of the estimated a, values are disconcertingly large. Since d is only a
crude proxy for unanticipated inflation it is almost certainly subject to errors in
 Common Stocks as a Hedge against Inflation 465

TABLE 1

REGRESSIONS OF THE REAL RETURN ON EQUITY, 1 + R^, ON THE UNANTICIPATED

PROPORTIONAL CHANGE IN PURCHASING POWER, d
Sample period: 1953-1972 1 Year holding period

Coefficients
(Standard error of Number Standard Durbin
coefficient) of Error of Watson
0 t statistics observations R^ Regression Statistic
«0 «1

.2 1.1285 6.4665 20 0.2128 0.2175 2.301

(0,0482) (2.9319)
2.2056

.4 1.1393 8.0644 20 0.2342 0.2145 2.151

(0.0482) (3.4374)
2.3261

.6 1,1415 9,3041 20 0,2582 0.2111 2.036

(0.0475) (3.7176)
2.5027

.8 1.1431 10.2862 20 0.2824 0.2076 1.962

(0.04672) (3.8657)
2.6609

1.0 1.1446 10.6683 20 0,2920 0.2062 1.940

(0.04646) (3,9157)
2.7240

measurement. But measurement errors in d would only bias our estimates of a,

towards zero.'
We can take the standard error of the regression as an estimate of Oj.
Regressions were also run using the sample period February, 1926 to December,
1952. In almost all of them the hypothesis that a , = 0 could not be rejected. Thus
the result that common stock returns and the rate of inflation are negatively
correlated is restricted to the post-Korean War period.
B. Estimates Based on (9b)
Specification (9b) is:

5. For a discussion of the bias caused by measurement errors see Johnston (1972, p, 281), To check
the validity of the statistical inferences made on the basis of the ordinary least squares results, I
reestimated all the equations using Durbin's instrumental variables technique described in Johnston
(1972, p, 285). The coefficients and their standard errors were very close to the ordinary least squares
estimates.
466 The Journal of Finance

Since D{t) = D{t) + d{t) this specification is equivalent to

\ + R,{t) = Po+'^iD{t) + a,d{t) + ^{t)

Note that this specification does not require us to know D{t) in order to estimate
«i-
Tables 2a, 2b, and 2c contain the regression results for 1 year, 3 month and 1
month holding periods, respectively. In interpreting these results one should keep in
mind that an inflation rate of zero corresponds to a value of 1 for D{t).

TABLE 2

REGRESSIONS OF THE REAL RETURN ON EQUITY, 1 + R^, ON THE INDEX OF PURCHASING

POWER, D

Coefficients
(standard errors Standard Durbin-
of coefficients) No, of Error of Watson
Sample period t statistics observations Regression Statistic

a. 1 Year Holding Period

1953-1972 -5,6828 6.9730 20 0,2391 0.2137 2.371
(2,8598) (2.9270)
-1,9871 2.3823
b. 3 Month Holding Period"
1953-1972 -4,9926 6,0575 80 0,1312 0,0843 1,906
(1,7610) (1,7713)
-2.8351 3,4197
c. 1 Month Holding Period"
1953-1972 -4,8182 5.8390 240 0,0953 0.0415 1.665
(1.1910) (1.1934)
-4,0455 4.8930

5-year subperiods:
1953-1957 -5,4449 6,4606 60 0,2449 0.0305 1.768
(1,5057) (1,5075)
-3,6162 4,2857

1958-1962 -7.1373 8.1574 60 0,1224 0,0410 1.478

(2.9059) (2.9089)
-2.4561 2.8043

1963-1967 -2,5650 3,5871 60 0.0309 0,0377 1,823

(2.8733) (2.8787)
-0,8927 1.2461

1968-1972 -7.7369 8,7719 60 0,0661 0.0537 1.547

(4.3760) (4.3924)
-1.7681 1.9971

" 1 + ^^(0 and D{t) were not annualized; therefore the standard errors of the regressions
have a time dimension equal to the length of the holding period.
 Common Stocks as a Hedge against Inflation 467

These results seem to confirm the belief that a, is positive. Moreover, the results
for a one month holding period indicate that even when the twenty year sample
period is broken down into four 5-year subperiods a, is still significantly positive
with a magnitude of around 6.*
C. Estimates Based on (9c)
Specification (9c) is:

This specification is more flexible than (9b) because it allows D{t) and d{t) to have
different coefficients.
The coefficient ^8, measures the effect of an anticipated change in purchasing
power on the real return on equity, while a, measures the effect of the unantici-
pated rate of change. Even those who are willing to believe that a, is positive would
expect fi^ to almost surely be insignificantly different from 0.
But the evidence presented in Table 3 seems to warrant the rejection of that
hypothesis. The table shows regression results for 1 year, 3 month and 1 month
holding periods and for three different values of 0, the speed of adjustment
parameter used in computing the .0(0 series. Although the t statistics in the
regressions for the 1 year holding period are rather low, they are based on a
relatively small sample of 20 observations, which leads to large standard errors of
the coefficients. As we go from a 1 year to a 3 month and then to a 1 month
holding period, the number of observations increases and so do the t statistics.
These results are even more disturbing than the earlier finding that a, is positive,
for they seem to imply that not only is the real return on equity negatively
correlated with unanticipated inflation, but it is also inversely related to anticipated
inflation. Even the lowest estimate of ;8, reported in Table 3 implies that a ceteris
paribus increase of 1 percentage point in the expected rate of inflation is associated
with a decline of 4 percentage points in the real return on equity.
To check for the stability of the parameters reported in Table 3 I divided the
twenty year sample period into four 5-year subperiods and reestimated (9c) for the
1-month holding period. Although the resulting estimates of ^, and a, varied quite
a bit from subperiod to subperiod they were all positive and in most cases
significantly greater than zero. F-tests were performed to test the hypothesis that
the regression coefficients were the same during all four subperiods and that
hypothesis could not be rejected at the .05 level of significance.
What do these results imply about the effectiveness of common stocks as an
inflation hedge? Our regressions indicate that for a one-year holding period, a is
about 7 and a^ about 0.21.
In order to calculate 5 one must also set the values of 1+r and a,. In the
calculations presented below 1 + r is arbitrarily set at 1.08. During the 1953-1972

6. Regression results reported by Lintner (1973) and by Oudet (1973), although derived using different
data, support the conclusion that common stock returns are negatively correlated with inflation. Their
regression specifications are comparable to my specification (9b), mutatis mutandis.
468 The Journal of Finance

TABLE 3

REGRESSIONS OF 1 -i- RJ^t) ON D(t) AND d{t)

Sample period: 1953-1972

Coefficients
(standard errors Standard Durbin-
of coefficients) No. of Error of Watson
d t statistics Observations R^ Regression Statistic
/So )3, a,
a. I Year Holding Period
,2 -4,5182 5.7807 7.0712 20 0.2413 0.2197 2.356
(7.0716) (7,2393) (3,0572)
-0.6389 0.7985 2.3130

.6 -2.9227 4,1560 10,3190 20 0,3139 0,2089 2,144

(3,4586) (3.5364) (3.7789)
-1,2961 1,1752 2.7307

1.0 -3,6310 4,8850 13,1927 20 0.3954 0.1961 2.0316

(2.8016) (2.8654) (4,0073)
-1.2961 1.7048 3,2922
b. 3 Month Holding Period
,2 -3,5680 4.6251 6,8953 80 0.1364 0.0845 1.936
(2.7293) (2,7447) (2,1571)
-1,3073 1,6851 3.1967

.6 -5,5594 6,6274 5,5475 80 0.1332 0.0847 1.888

(2.2150) (2,3377) (2,1464)
-2.5099 2.9751 2,5846

1,0 -6,3119 7,3841 4.7322 80 0,1508 0,0838 1,871

(2.0016) (2,0232) (2.0231)
-3.1378 3,6496 2,3392
c, 1 Month Holding Period
,2 -5.5853 6.6075 5,4782 240 0,0962 0.0416 1.666
(1,9078) (1.9114) (1,3853)
-2,9276 3,4568 3.9546

,6 -6,3307 7.3543 4,9940 240 0.1029 0.0414 1.678

(1,5931) (1,5962) (1,3306)
-3,9737 4.6073 3.7534

1,0 -5.8428 6.8655 5.2527 240 0,1013 0,0414 1,675

(1.4365) (1,4393) (1,2781)
-4,0673 4,7699 4,1097

period, the ten estimated standard deviations of d (one for each value of 9) for a
one year holding period range from a low of 0.0118 to a high of 0.0166, implying
values for Oj/a^ of 17.8 and 12.6, respectively.
Let us assume that 02/0, = 12.6. In that case 5 = 0.18 and iv=-.O3. In other
words by selling short about 8.03 worth of equity for every 81.03 invested in
 Common Stocks as a Hedge against Inflation 469

nominal bonds a hedger could eliminate roughly 18 per cent of the variance of the
real return on those bonds. If 02/0, = 17.8 then 5' = 0.10 and H'= —.02.
To compute the cost of hedging we must assume values for R^ and R^. The mean
values of these real rates of return for the 1953-1972 period are 1.46 per cent p.a.
and 12.9 per cent p.a., respectively. Thus, if 02/0, = 12.6 the cost of the 18 per cent
reduction in the variance of the real return on the nominal bond would be a
reduction in expected return of 0.34 per cent p.a.

IV. SUMMARY AND CONCLUSIONS

This paper has attempted to address the question of how effectively an investor can
hedge against inflation with a "representative" well-diversified portfolio of com-
mon stocks. Since hedging against inflation means reducing the uncertainty of real
returns which stems from uncertainty about the future price level, the measure of
hedging effectiveness used is the proportional reduction in the variance of the real
return on a nominal bond attainable by combining it with the equity portfolio.
The formula for this measure reveals that the effectiveness of common stocks as
an inflation hedge depends on two parameters. The first of these is the ratio of the
variance of the non-inflation stochastic component of the real return on common
stocks to the variance of unanticipated inflation. The larger this variance ratio is,
the less effective is equity as an inflation hedge.
The second parameter is the difference between the nominal return on the
nominal bond and the coefficient of unanticipated inflation in the equation for the
real return on equity. The greater the absolute value of this difference, the more
effective is equity as an inflation hedge.
Using annual, quarterly and monthly data for the twenty year period 1953 to
1972, these parameters were estimated under a number of different assumptions
about the stochastic process generating the data. The regression results obtained in
deriving the estimates seem to indicate that, contrary to a commonly held belief
among economists, the real return on equity is negatively related to both antici-
pated and unanticipated inflation, at least in the short run. This negative correla-
tion leads to the surprising and somewhat disturbing conclusion that to use
common stocks as a hedge against inflation one must sell them short.

REFERENCES
1. B. Branch, "Common Stock Performance and Inflation: An International Comparison," J.
Business, 1974, 47, 48-52.
2. P. Cagan, "Common Stock Values and Inflation—The Historical Record of Many Countries,"
Nationat Bureau Report Supptement, New York, 1974.
3. E. F. Fama and J. D. MacBeth, "Tests of the Multiperiod Two-parameter Model," J. Financiat
Economics, 1974, 1, 43-66.
4. J. Jaffee and G. Mandelker, "The 'Fisher Effect' for Risky Assets: An Empirical Test," working
paper, 1975.
5. J. Johnston, Econometric Methods, 2nd ed.. New York 1972.
6. J. Lintner, "Inflation and Common Stock Prices in A Cyclical Context," National Bureau of
Economic Research 53rd Annual Report, New York 1973.
7. H. Markowitz, "Portfolio Selection," Journal of Finance, 1952, 7, 77-91.
470 The Journal of Finance

8. R. C. Merton, "Lifetime Portfolio Selection under Uncertainty: The Continuous-Time Case," Rev.
Econ. Statist; 1969, 51, 247-257.
9. . "Optimum Consumption and Portfolio Rules in a Continuous-Time Model," Journal of
Economic Theory, 1971, 3, 373-413.
10. C. R. Nelson, "Inflation and Rates of Return on Common Stocks," working paper. University of
Chicago, February, 1975.
11. B. Oudet, "The Variation of the Return on Stocks in Periods of Inflation," J. Financial and
Quantitative Analysis, 1973, 8, 247-258.
12. F. K. Reilly, G. L. Johnson, and R. E. Smith, "Inflation, Inflation Hedges, and Common Stocks,"
Financial Analysts Journal, 1970, 28, 104-110.
13. F. K. Reilly et al, "Individual Common Stocks as Inflation Hedges," / . Financial and Quantitative
Analysis, 1971, 6, 1015-1024.