Recurrent Hyperinflations and Learning

• Albert Marcet ^[1] ; Juan Pablo Nicolini ^[2]
  1. [1] Universitat Pompeu Fabra

     Universitat Pompeu Fabra

     Barcelona, España

     
  2. [2] Universidad Torcuato Di Tella

     Universidad Torcuato Di Tella

     Argentina

     
• Localización: Documentos de Trabajo ( CEMFI ), Nº. 21 (CEMFI Working Paper No. 9721, December 1997), 1997
• Idioma: inglés
• Enlaces
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• Resumen

  • 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 fully 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 80's. 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.