Rational Ekpectations, Currency Substitutıon And The Demand For Money During The German Hyperinflation

Date

1987

Author

Breece, James H.

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The literatüre estimating the demand for money during the German hyperinflation is based on three different data sets, numerous expectation formations, and provides several different eonclusions. This paper attempts to determine the relative explanatory power of the three data sets based on a common model which incorporates the essentia! characteristics of the earlier models. A two-step instrumental variable estimation technique is used; the first step being the estimation of the "rational" expectations, and the second step the estimation of the parameters of the demand equation. The f indings of this study show that the empirica! results are dependent on the data employed, and that the seemingly different results obtained in the literatüre come from e\pectation formations and underlying money demand specifıcations.

URI

https://hdl.handle.net/11511/110550

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Department of Economics, Article