Money and Prices in Models of Bounded Rationality in High Inflation Economies
This paper studies the short run correlation of inflation and money growth. We study whether a model of learning does better or worse than a model of rational expectations, and 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. (Copyright: Elsevier)
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Volume (Year): 8 (2005)
Issue (Month): 2 (April)
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