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ent different natures. I suppose that because various economy conditions and Graham considered the reason is the changes of US monetary policy. At the same time, he also examined how the fiscal deficits effect on the relationship and disagreed with Geske and Roll.

7. Conclusion:

Reviewing previous literatures, we can draw a conclusion that there is a close relationship between inflation, interest rate, and stock return, which is also a controversial debate, and interest rate and cash flows are two mainly factors fluctuated by inflation. The government wants less budget deficits by implementing monetary policy which is mainly consisted by interest rate changes; the changes of interest rates as discount rates are used in calculation of stock market. Little researches have been done in discovering how inflation influences on concentrated companies and competitive companies respectively, which is an area that my dissertation focus on.

I suppose that the specific inflation can affect stock returns through changes cash flows; and general inflation through influence on interest rates to affect on stock market. Therefore, specific Inflation can be seen as a double-edges sword impact on companies’ cash flows. On the one hand, it can enhance companies’ cash flows due to higher selling prices. On the other hand, as general goods prices are increased by inflation, the cost of productions getting higher as well. Inflation can induce a broader fierce competition and make companies less profitability due to higher selling prices and higher costs respectively. Therefore, it is worth to consider whether or not specific inflation could really enhance cash flows of companies, and then increase share prices. As concentrated companies who are enough mightiness, powerful and monopolistic in the industrial field, seems always get benefits from inflation, because concentrated companies play a dominant role in the market: the customers have no alternative options to choose and have to accept higher purchasing prices; Moreover, taking advantages of famous brands and economic strengths, the concentrated companies may not be impacted by higher material costs. In contrary, competitive companies have to code with more fierce competitions because customers want to find the lowest price from a general higher prices list. My dissertation on the one hand focuses on how general inflation affects on interest rate and then affect on share prices. On the other hand it will concentrate on how specific inflation influence on concentrated companies and competitive companies respectively.

References:

Books：

1. Nellis.J G&Parker.D, (2004), Principles of Macroeconomics, England, Pearson Education Ltd.

2. Fisher, I. (1930). ‘The theory of interest’, New York, Macmillan Co.

3. Paper C04, Fundamentals of Business Economics, Relevant for 2009 Computer-Based Assessments, The Official CIMA Learning System.

Journals: articles

1. Barnes.M & Boyd.J.H& Smith.B.D, (1999), Theories of Money: ‘Credit and Aggregate Economic Activi本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。