Redenomination of currency has become a common phenomenon in recent past among emerging and transitional economies. In 2007, Ghana became one of the economies to redenominate in recent past. This currency policy adaptation has the potential of triggering certain individual behavioral biases on...

Inadequate consideration of inflation when making long-term financial decisions – so-called money illusion – can have severe consequences for future financial wellbeing. Thus, it is essential to understand how different methods of informing private investors about inflation affect their...

Money illusion, first documented by Fisher(1928), is the phenomenon that an agent cannot distinguish real monetary value from nominal one. In this paper, money illusion is considered as a matter of information based on the Grossman and Stiglitz(1980), and the uninformed investors can...

We develop a general equilibrium model where investors experience money and nominal-price illusions. Our theoretical results show that the compounding effects of money and nominal-price illusions increase (decrease) stock prices (yields). Our empirical analysis documents that the effect of money...

This paper researches the impact of negative and positive nominal interest rates on money illusion for individuals’ saving and investment decisions involving risk-taking. Money illusion refers to an individual’s nominal rather than real reasoning, driving towards suboptimal decisions. Using...