Money Inflation Research Articles

Exchange Rate Rules, Black Market Premia and Fiscal Deficits: The Bolivian Hyperinflation

With dual exchange rates, where a managed official exchange rate co-exists with a floating black market rate, a given budget deficit may be consistent with many different inflation rates rather than two, which is the normal result in closed economy systems. Further, all these inflation equilibria are saddle-point stable. A policy of adjusting the official exchange rate towards the black market rate may cause the economy to converge to a high-inflation, saddle-point stable equilibrium where money inflation elasticity exceeds unity. The analytics are motivated and illustrated by the Bolivian hyperinflation of 1984–1985.

The Causal Relation Between Money and Inflation in a Developing Economy

Is there unidirectional causality from money to inflation? This question was examined by using Pakistan as a case study for a developing country. In this paper money was found to be endogenous in Pakistan, and both narrow and broad money indicate a bi-directional relationship with inflation. The causal inferences were examined using alternate causality tests, different prewhitening filters, and different proxies for money and inflation; all of which have direct bearing on the causal inferences. The estimated money inflation feedbacks were interpreted to be “caused” by the link of money and inflation with government budget deficits, balance of payments adjustments and suppressed interest rates. [310]

"Cost Inflation" versus "Demand Inflation": A Useful Distinction?

A distinguishing characteristic of much recent thinking and writing in the general area of price behavior has been the rapid proliferation of types. It is no longer fashionable to speak simply of inflation; instead, one must specify whether he means cost inflation, demand inflation, excess-demand inflation, wage inflation, money inflation, structural inflation, log-rolling inflation, buyers' inflation, sellers' inflation, mark-up inflation, administered-price inflation, and so on. This unmistakable-and undeniably significant-trend in linguistic fashions suggests a number of interesting questions, the most basic being: why do we need all these distinctions and what contribution do they make to the formulation of public policy? The purpose of this paper is to shed some light on this broad question by analyzing the usefulness of the most popular single dichotomy-namely, the distinction between cost inflation and demand inflation.' The decision to concentrate on this one species of the typology fever is based on the conviction that to analyze all of the above types individually would: (a) be an almost endless task; and (b) involve considerable repetition and hair-splitting.

Uncertainty, Evolution, and Economic Theory

A modification of economic analysis to incorporate incomplete information and uncertain foresight as axioms is suggested here. This approach dispenses with “profit maximization”; and it does not rely on the predictable, individual behavior that is usually assumed, as a first approximation, in standard textbook treatments. Despite these changes, the analytical concepts usually associated with such behavior are retained because they are not dependent upon such motivation or foresight. The suggested approach embodies the principles of biological evolution and natural selection by interpreting the economic system as an adoptive mechanism which chooses among exploratory actions generated by the adaptive pursuit of “success” or “profit.” The resulting analysis is applicable to actions usually regarded as aberrations from standard economic behavior as well as to behavior covered by the customary analysis. This wider applicability and the removal of the unrealistic postulates of accurate anticipations and fixed states of knowledge have provided motivation for the study.

The Money Inflation and the Future of Prices

The Money Inflation and the Future of Prices

Money Inflation in the United States. Murray Shipley Wildman

<i>Money Inflation in the United States</i>. Murray Shipley Wildman