Recurrent hyperinflations and learning

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Universidad Torcuato Di Tella

Abstract

This paper uses a model of boundedly rational learning to account for the observations of recurrent hyperinflations in the last decade. We show that, in a standard monetary model when the full rational expectations assumption is replaced by a pseudo rational learning, the model replicates some stylized facts observed during the recurrent hyperinflations observed in some countries in the 80's much better than pre-existing models. We argue that this departure of rational expectations does not preclude falsifiability of the model and it does not violate reasonable rationality requirements.

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Este Documento forma parte de la serie Working Papers (ISSN 0327-9588), publicada por la Universidad Torcuato Di Tella entre 1993 y 2001

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Inflación, Inflation, Modelo económico, Economic Models, Investigación económica, Economic research

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