Money and Prices in Models of Bounded Rationality in High Inflation Economies

Albert Marcet and Juan Pablo Nicolini

Review of Economic Dynamics, 2005, vol. 8, issue 2, 452-479

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. (Copyright: Elsevier)

Keywords: Inflation and money growth; switching regimes; quasi-rationality. (search for similar items in EconPapers)
JEL-codes: D83 E17 E31 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Money and Prices in Models of Bounded Rationality in High Inflation Economies (2015)
Working Paper: 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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DOI: 10.1016/j.red.2005.01.006

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