Modeling Hyperinflation Phenomenon: A Bayesian Approach
Hyperinflations are short-lived episodes of economic instability in prices which characteristically last twenty months or less. Classical statistical techniques applied to these small samples could lead to an incorrect inference problem. This paper describes a Bayesian approach for modeling hyper-inflations which improves the modeling accuracy using small-sample inference based on specific parametric assumptions. A theory-congruent model for the Bolivian hyperinflation was estimated as a case study.
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