SURFOVANJE SA PLIMOM – NEKRETNINE KAO ZAŠTITA OD INFLACIJE
SURFING WITH THE TIDE: REAL ESTATE AS A HEDGE AGAINST INFLATION3

Summary/Abstract: After a multi-year period of low interest rates and monetary expansions following the so-called great moderation, the issue of how to protect capital from value erosion became highly relevant once again.Recent notable increase in inflation re-woke theoretical and practical disagreements about what causesinflation in the first place, in which ways and to what extent inflation is being costly for both householdsand investors, and in particular how if at all households are able to protect their modest portfolios.Inflation undoubtedly erodes the value of corporate earnings as well as profits of financialintermediaries, thereby impacting virtually all asset classes and all kinds of investors. Nonetheless, it isusually the harshest on the receiving end, since predominantly households are most badly hit byinflation, especially those with fixed- or way too slowly adjusting incomes. Therefore, during a periodof accelerated inflationary pressure, it becomes ever more important for all parties to obtain financialinstruments that effectively protect capital from value erosion. The question arises of where to invest inorder to at least preserve value i.e. keep up with the inflation rate in terms of investment returns. Theaim of this research is to measure the correlation between real estate performance and inflation in orderto determine whether this type of asset can be a good source of protection against inflation. Also, theaim of the paper is to compare the real estate protective potential against inflation with the performanceof stocks, bonds and gold in conserving inherited purchasing power

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