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Speculative hyperinflations: when can we rule them out?

Oscar Arce ()

No 607, Working Papers from Banco de España, Working Papers Homepage

Abstract: Motivated by a strong degree of hysteresis in the stock of monetization observed after the end of hyperinflations, I provide a cash-and-credit model in which the use of money exhibits some persistence because individuals can establish long-lasting credit relationships. This feature helps to account for the main stylized facts of extreme hyperinflations and reconcile some conflicting views on their causes, development and end without departing from rational expectations. Unlike the existing literature, I show that when hysteresis is possible, an orthodox fiscal-monetary reform that successfully stops a speculative hyperinflation may not be sufficient to prevent it.

Keywords: hyperinflation; fiscal-monetary reform; multiple equilibria; hysteresis (search for similar items in EconPapers)
JEL-codes: E31 E41 E63 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2006-04
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (2) Track citations by RSS feed

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http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... o/06/Fic/dt0607e.pdf First version, April 2006 (application/pdf)

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Working Paper: Speculative Hyperinflations: When Can We Rule Them Out? (2006) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0607

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