Graduation Year
2025
Date of Submission
12-2024
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
Eric Hughson
Terms of Use & License Information
Rights Information
© 2024 Casper Kornelis Hoving
Abstract
This paper analyzes the cross-sectional differences of how unexpected inflation affects industry returns, controlling for market factors and firm characteristics. The methodology builds upon Bernard (1986) in trying to explain and detect differing cross-sectional effects by industry, but instead considers daily reactions to the release of monthly CPI figures. My hypothesis was that higher unexpected inflation would have a negative effect on industry returns but when controlling for market factors and firm characteristics the reactions would be dampened. The findings of this study confirm that higher unexpected inflation tends to have a negative effect on market returns, but show mixed implications for industry returns when controlling for market factors. Furthermore, the inclusion of firm characteristics did not have the anticipated effect, indicating that included systematic variables may have captured a significant portion of the variance in industry returns.
Recommended Citation
Hoving, Casper, "Weathering the Storm: Examining the Impact of Unexpected Inflation on Industry Returns" (2025). CMC Senior Theses. 3807.
https://scholarship.claremont.edu/cmc_theses/3807