Real Estate, Gold, and Equity as Inflation Hedges : Evidence from India

Praful Gupta

doi:10.46609/IJSSER.2026.v11i09.034

Title: Real Estate, Gold, and Equity as Inflation Hedges : Evidence from India
Authors: Praful Gupta
Journal: International Journal of Social Science and Economic Research (IJSSER) ISSN: 2455-8834 Volume: 11 Issue: 9 Publication Date: September 2026 DOI: 10.46609/IJSSER.2026.v11i09.034
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Praful Gupta Shiv Nadar School, Noida, India
MLA 8 Gupta, Praful. "Real Estate, Gold, and Equity as Inflation Hedges : Evidence from India." Int. j. of Social Science and Economic Research, vol. 11, no. 9, Sept. 2026, pp. 5029-5060, doi.org/10.46609/IJSSER.2026.v11i09.034. Accessed Sept. 2026. APA 6 Gupta, P. (2026, September). Real Estate, Gold, and Equity as Inflation Hedges : Evidence from India. Int. j. of Social Science and Economic Research, 11(9), 5029-5060. Retrieved from https://doi.org/10.46609/IJSSER.2026.v11i09.034 Chicago Gupta, Praful. "Real Estate, Gold, and Equity as Inflation Hedges : Evidence from India." Int. j. of Social Science and Economic Research 11, no. 9 (September 2026), 5029-5060. Accessed September, 2026. https://doi.org/10.46609/IJSSER.2026.v11i09.034.
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ABSTRACT: This study examines whether Indian residential real estate, gold, or equity provides a statistically significant inflation hedge over the period 2013 to 2025. Fifty two quarterly observations are analysed using four econometric specifications: the classical Fisher regression, a corrected specification with differenced inflation to address integration order mismatch, the Fama and Schwert decomposition into expected and unexpected components, and a distributed lag model to accommodate index smoothing in the Reserve Bank of India House Price Index. The Engle and Granger cointegration procedure tests for a long run equilibrium between each asset price and the consumer price index. Standard errors follow Newey and West with four lags. Every specification is subjected to the full battery of ARDL style diagnostic tests, including normality, serial correlation, heteroskedasticity, ARCH, Ramsey RESET, and CUSUM parameter stability. Three central findings emerge. First, no asset class provides a statistically significant contemporaneous inflation hedge at the quarterly frequency. Second, real estate returns display a delayed response to inflation, consistent with the smoothing bias in the RBI index; adding four quarterly lags increases the coefficient of determination from 0.002 to 0.245. Third, equity prices and consumer prices are cointegrated at the 1 percent level, making equity the sole long run inflation hedge in the sample. Findings imply that diversification remains the appropriate household strategy for hedging inflation over any meaningful horizon.

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