Money and prices in models of bounded rationality in high inflation economies

Albert Marcet and Juan Pablo Nicolini

No 469, Working Paper Series from European Central Bank

Abstract: 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. JEL Classification: D83, E17, E31

Keywords: Inflation andmoney growth; quasi-rationality; switching regimes (search for similar items in EconPapers)
Date: 2005-04
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Money and Prices in Models of Bounded Rationality in High Inflation Economies (2015)
Journal Article: Money and Prices in Models of Bounded Rationality in High Inflation Economies (2005)
Working Paper: Money and Prices in Models of Bounded Rationality in High Inflation Economies (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:2005469

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