Modelling the Transaction Role of Money and the Essentiality of Money in an Explosive Hyperinflation Context
AbstractThis paper shows firstly that the cash-in-advance model presents exactly the same kind of limitations as the money-in-the-utility-function model for characterizing explosive hyperinflation. These limitations relate to sufficient money essentiality in the sense of Scheinkman . Thereby this paper departs from Gutierrez and Vazquez  and contributes to the understanding of failure of the Cagan inflationary finance models with perfect foresight. Secondly, it shows that the inclusion of the goods market equilibrium condition calls into question the validity of explosive hyperinflationary paths as equilibrium paths in the cash-in-advance model. Two solutions are proposed to save the validity of explosive hyperinflation paths.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 166 (2010)
Issue (Month): 3 (September)
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Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
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- Alexandre Sokic, 2012.
"The Monetary Analysis of Hyperinflation and the Appropriate Specification of the Demand for Money,"
German Economic Review,
Verein für Socialpolitik, vol. 13(2), pages 142-160, 05.
- Sokic, Alexandre, 2010. "The monetary analysis of hyperinflation and the appropriate specification of the demand for money," MPRA Paper 21503, University Library of Munich, Germany.
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