The Impact of Inflation on the Aggregate Debt-Asset Ratio

@inproceedings{Hochman1985TheIO,
  title={The Impact of Inflation on the Aggregate Debt-Asset Ratio},
  author={Shalom Hochman and Oded Palmon},
  year={1985}
}
This paper demonstrates that, contrary to the results of previous studies, the impact of inflation on the aggregate debt-asset ratio cannot be determined theoretically. However, it is shown that inflation is likely to increase this ratio when personal income tax schedules are indexed to the price level and/or when leverage-related costs are relatively high and the personal tax rate on income from holding common stocks is relatively low. STUDIES CONCERNING THE EFFECT of inflation on firms… CONTINUE READING