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Modelling the Transaction Role of Money and the Essentiality of Money in an Explosive Hyperinflation Context
Journal of Institutional and Theoretical Economics (JITE) / Zeitschrift für die gesamte Staatswissenschaft
Vol. 166, No. 3 (September 2010), pp. 387-396
Published by: Mohr Siebeck GmbH & Co. KG
Stable URL: http://www.jstor.org/stable/20798601
Page Count: 10
You can always find the topics here!Topics: Hyperinflation, Explosives, Economic inflation, Economic growth models, Economic models, Utility functions, Economic modeling, Cash, Financial transactions
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This paper shows firstly that the cash-in-advance model presents exactly the same kind of limitations as the money-in-the-utility-function model for characterizing explosive hyperinflation. These limitations relate to sufficient money essentiality in the sense of Scheinkman . Thereby this paper departs from Gutierrez and Vazquez  and contributes to the understanding of failure of the Cagan inflationary finance models with perfect foresight. Secondly, it shows that the inclusion of the goods market equilibrium condition calls into question the validity of explosive hyperinflationary paths as equilibrium paths in the cash-in-advance model. Two solutions are proposed to save the validity of explosive hyperinflation paths.
Journal of Institutional and Theoretical Economics (JITE) / Zeitschrift für die gesamte Staatswissenschaft © 2010 Mohr Siebeck GmbH & Co. KG