Paper #875

Título:

Money and prices in models of bounded rationality in high inflation economies

Autores:

Albert Marcet y Juan Pablo Nicolini

Fecha:

Enero 2005

Resumen:

This paper studies the short run correlation of inflation and money growth. We study whether a model of learning can do better than a model of rational expectations, 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.

Palabras clave:

Inflation and money growth, switching regimes, quasi-rationality

Códigos JEL:

D83, E17, E31

Área de investigación:

Macroeconomía y Economía Internacional

Publicado en:

Review of Economic Dynamics 8 (2005) 452 - 479

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