Money and prices in models of bounded rationality in high inflation economies
AbstractThis paper studies the short run correlation of inflation and money growth. We study whether a model of learning can do better than a model of rational expectations, we focus our study on countries of high inflation. We take the money process as an exogenous variable, estimated from the data through a switching regime process. We find that the rational expectations model and the model of learning both offer very good explanations for the joint behavior of money and prices.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 875.
Date of creation: Jan 2005
Date of revision:
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Web page: http://www.econ.upf.edu/
Inflation and money growth; switching regimes; quasi-rationality;
Other versions of this item:
- Albert Marcet & Juan Pablo Nicolini, 2005. "Money and Prices in Models of Bounded Rationality in High Inflation Economies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(2), pages 452-479, April.
- Albert Marcet & Juan Pablo Nicolini, 2004. "Money and Prices in Models of Bounded Rationality in High Inflation Economies," Working Papers 172, Barcelona Graduate School of Economics.
- Marcet, Albert & Nicolini, Juan Pablo, 2005. "Money and prices in models of bounded rationality in high inflation economies," Working Paper Series 0469, European Central Bank.
- Albert Marcet & Juan Pablo Nicolini, 2005. "Money and Prices in Models of Bounded Rationality in High Inflation Economies," Working Papers 217, Barcelona Graduate School of Economics.
- 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-2005-09-29 (All new papers)
- NEP-CBA-2005-10-16 (Central Banking)
- NEP-MAC-2005-09-30 (Macroeconomics)
- NEP-MON-2005-10-01 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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