Recurrent Hyperinflations and Learning

Albert Marcet and Juan Pablo Nicolini

No 1875, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper uses a model of boundedly rational learning to account for the observations of recurrent hyperinflations in the last decade. We study a standard monetary model, where the full rational expectations assumption is replaced by a formal definition of quasi-rational learning. The model under learning is able to match remarkably well some crucial stylized facts, observed during the recurrent hyperinflations experienced by several countries in the 1980s. We argue that, despite being a small departure from rational expectations, quasi-rational learning does not preclude falsifiability of the model and it does not violate reasonable rationality requirements.

Keywords: Convertibility; Hyperinflations; quasi-rationality; stabilization plans (search for similar items in EconPapers)
JEL-codes: D83 E17 E31 (search for similar items in EconPapers)
Date: 1998-05
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Citations: View citations in EconPapers (18)

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Related works:
Journal Article: Recurrent Hyperinflations and Learning (2003)
Working Paper: Recurrent Hyperinflations and Learning (1997)
Working Paper: Recurrent Hyperinflations and Learning (1997)
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