Mr. Shaalan, economist in the Finance Division, is a graduate of Illinois College and of Columbia University. He was formerly Assistant Professor at the American University at Cairo, United Arab Republic.
E.M. Bernstein and I. G. Patel. “Inflation in Relation to Economic Development,” Staff Papers, Vol. II (1951-52), pp. 363-98.
In this context, financial assets refer to assets denominated in money terms; the purchase of equities is considered equivalent to the purchase of physical assets.
Nicholas Kaldor, “Economic Growth and the Problem of Inflation,” Eco-nomica, New Series, Vol. XXVI (1959), p. 288.
For details of this definition, see H. Makower and J. Marschak, “Assets, Prices and Monetary Theory,” Economica, New Series, Vol. V (1938), pp. 261-88. (Reprinted in American Economic Association, Readings in Price Theory, 1952, pp. 283-310.)
John Maynard Keynes, The General Theory of Employment, Interest, and Money (New York, 1935), p. 246.
Presumably this is what Keynes had in mind when he stated, “Money itself rapidly loses the attribute of ‘liquidity’ if its future supply is expected to undergo sharp changes.” (Ibid., p. 241, fn. 1.)
Keynes, in discussing liquidity, singles out two characteristics that are required in order that the asset qualify as a “liquid” asset. These are inelasticity of production and of substitution. (Ibid., p. 241.)
It is sometimes suggested that an inflationary economy is not characterized by uncertainty, in the sense that people know, or think they know, the direction of prices. That may well be. However, in an environment where inflation has been rampant, certainty about the level of prices (as opposed to the direction) and certainty about the movement of relative prices in the future are less likely than they would be in a stable environment.
Gunnar Myrdal, An International Economy (New York, 1956), pp. 202-203.
Benjamin Higgins, Economic Development: Principles, Problems and Policies (New York, 1959), p. 464.
Op. cit., p. 383.
The classification is not reproduced here.
Though the data for Argentina are in line with this conclusion, it is believed that cattle stocks form a significant part of inventories and that the negative inventory investment recorded may be partially attributable to excessive slaughtering of cattle.
These countries are the only ones where both a high (except possibly Colombia) and a wide movement in the rate of inflation have occurred and for which the necessary data are available.
Basically, this method was used for Chile by Otto H. Korican in The Effects of Inflation Upon the Rate and the Productivity of Chilean Investment, 1949 to 1958 (U.S. Operations Mission to Chile, Staff Paper No. 1, August 1960).
Net figures rather than gross figures would have been more appropriate for the calculations given here. However, the use of gross figures need not seriously detract from the value of the resulting coefficients since the concern is with the movements of the coefficients rather than with their absolute levels.