A Framework for Inflation-Adjusted Valuation under Dynamic Economic Conditions

A Framework for Inflation-Adjusted Valuation under Dynamic Economic Conditions | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article A Framework for Inflation-Adjusted Valuation under Dynamic Economic Conditions Janardan Behera This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7838569/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Inflation steadily reduces the value of money, and with it the assurance that tomorrow’s funds will mean what they do today. Anyone dealing with long-term commitments, governments issuing bonds, insurers planning payouts, or families saving for retirement has to confront this gap between the numbers on paper and what those numbers will buy. The usual present value formulas assume that inflation stays fixed at a single rate, but this is a convenient fiction rather than a reflection of reality. In practice, inflation changes with economic policy, financial markets, and even demographic forces, sometimes gradually and at other times in sudden, disruptive bursts. This paper develops a framework for valuing future funds when inflation is neither constant nor predictable but variable and occasionally stochastic. We extend traditional formulas to handle both discrete and continuous inflation paths and establish theoretical results on their behavior, including monotonicity, bounds, and convergence properties. To bring ideas to life, we combine real-world data with controlled simulations to show how even modest changes in inflation can dramatically change long-horizon outcomes. The analysis speaks to practical concerns about retirement planning, insurance, and sovereign debt, while also suggesting directions for more robust forecasting. Inflation Present Value Real Value Factor Reduction PCA LASSO Time series Stochastic Inflation. Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7838569","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":528455778,"identity":"cbccdc81-b343-49c8-8234-a47c95c9134e","order_by":0,"name":"Janardan 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