Recurrent hyperinflations and learning
AbstractThis paper uses a model of boundedly rational learning to account for the observations of recurrent hyperinflations in the last decade. We study a standard monetary model where the fully rational expectations assumption is replaced by a formal definition of quasi-rational learning. The model under learning is able to match remarkably well some crucial stylized facts observed during the recurrent hyperinflations experienced by several countries in the 80's. We argue that, despite being a small departure from rational expectations, quasi-rational learning does not preclude falsifiability of the model and it does not violate reasonable rationality requirements.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 244.
Date of creation: Nov 1995
Date of revision: Nov 2001
Contact details of provider:
Web page: http://www.econ.upf.edu/
Hyperinflations; convertibility; stabilization plans; quasi-rationality;
Other versions of this item:
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-02-22 (All new papers)
- NEP-DGE-1999-02-22 (Dynamic General Equilibrium)
- NEP-MON-1999-02-22 (Monetary Economics)
- NEP-TID-1999-03-08 (Technology & Industrial Dynamics)
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