Revisiting Speculative Hyperinflations in Monetary Models: A Rejoinder

Behzad Diba and Olivier Loisel

Review of Economic Dynamics, 2024, vol. 52, 64-69

Abstract: In this note, we present a formal proof of Obstfeld and Rogoff's (1983, 2021) claim that their fractional-currency-backing scheme eliminates the inflationary equilibria in the money-in-utility model. To do so, we fully articulate the optimization problem of consumers who have the option to redeem (part or all of) their cash for a small amount of goods at any date. We also relate the scheme to the Fiscal Theory of the Price Level. (Copyright: Elsevier)

Keywords: Speculative hyperinflation; Fractional currency backing; Money-in-utility model (search for similar items in EconPapers)
JEL-codes: E31 E42 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Online Appendix to "Revisiting Speculative Hyperinflations in Monetary Models: A Rejoinder" (2023)
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DOI: 10.1016/j.red.2023.11.005

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