The monetary analysis of hyperinflation and the appropriate specification of the demand for money

Alexandre Sokic

MPRA Paper from University Library of Munich, Germany

Abstract: The paper emerges from the failure of the traditional models of hyperinflation with rational expectations or perfect foresight. Using the insights from two standard optimizing monetary settings the paper shows that the possibility of perfect foresight monetary hyperinflation paths depends robustly on the essentiality of money. We show that the popular semilogarithmic form of the demand for money is not appropriate to analyse monetary hyperinflation with perfect foresight. We propose a simple test of money essentiality for the appropriate specification of the demand for money equation in empirical studies of hyperinflation.

Keywords: monetary hyperinflation; inflation tax; money essentiality (search for similar items in EconPapers)
JEL-codes: E31 E41 (search for similar items in EconPapers)
Date: 2010-03-19
New Economics Papers: this item is included in nep-cba, nep-hpe, nep-mac and nep-mon
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Related works:
Journal Article: The Monetary Analysis of Hyperinflation and the Appropriate Specification of the Demand for Money (2012)
Journal Article: The Monetary Analysis of Hyperinflation and the Appropriate Specification of the Demand for Money (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:21503

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