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Global Bifurcations, Credit Rationing and Recurrent Hyperinflations

  • Pere Gomis-Porqueras
  • Àlex Haro

This paper proposes an alternative explanation to recurrent hyperinflations other than bounded rationality by explicitly considering the global dynamics of an economy with credit market frictions. In this paper we show that hyperinflations are self-generated and are manifestations of the underlying global dynamic properties of an economy with perfect foresight rational agents that face credit rationing. Moreover, we found that economies that are more credit constrained are more likely to experience recurrent hyperinflations.

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Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 239.

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Date of creation: Dec 2005
Date of revision:
Handle: RePEc:bge:wpaper:239
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  1. Brock, W.A., 1995. "A Rational Route to Randomness," Working papers 9530, Wisconsin Madison - Social Systems.
  2. Bental, B. & Eckstein, Z., 1988. "The Dynamics Of Inflation With Constant Deficit Under Expected Regime Change," Papers 35-88, Tel Aviv.
  3. Albert Marcet & Juan P. Nicolini, 1995. "Recurrent hyperinflations and learning," Economics Working Papers 244, Department of Economics and Business, Universitat Pompeu Fabra, revised Nov 2001.
  4. Williamson, Stephen D., 1986. "Costly monitoring, financial intermediation, and equilibrium credit rationing," Journal of Monetary Economics, Elsevier, vol. 18(2), pages 159-179, September.
  5. Beatrix Paal, 2000. "Destabilizing effects of a successful stabilization: a forward-looking explanation of the second Hungarian hyperinflation," Economic Theory, Springer, vol. 15(3), pages 599-630.
  6. Pintus, P. & Sands, D. & de Vilder, R., 1998. "On the Transition from Local Regular to Global Iregular Fluctuations," Papers 9818, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
  7. Gomis-Porqueras, Pere & Haro, Alex, 2003. "Global dynamics in macroeconomics: an overlapping generations example," Journal of Economic Dynamics and Control, Elsevier, vol. 27(11), pages 1941-1959.
  8. Bruce D. Smith & John H. Boyd, 1998. "Capital market imperfections in a monetary growth model," Economic Theory, Springer, vol. 11(2), pages 241-273.
  9. de Vilder, Robin, 1996. "Complicated Endogenous Business Cycles under Gross Substitutability," Journal of Economic Theory, Elsevier, vol. 71(2), pages 416-442, November.
  10. Evans, Jean Lynne & Yarrow, George Keith, 1981. "Some Implications of Alternative Expectations Hypotheses in the Monetary Analysis of Hyperinflations," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 61-80, March.
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