Recurrent Hyperinflations and Learning

Abstract

This paper uses a model of boundedly rational learning to account for the observations of recurrent hyperin°ations in the last decade. We study a standard monetary model where the fully rational expectations assumption is replaced by a formal de¯nition of quasi-rational learning. The model under learning is able to match remarkably well some crucial stylized facts observed during the recurrent hyperin°a-tions experienced by several countries in the 80's. We argue that, despite being a small departure from rational expectations, quasirational learning does not preclude falsi¯ability of the model, it does not violate reasonable rationality requirements and it can be used for policy evaluation.

Using Survey Data of Inflation Expectations in the Estimation of Learning and Rational Expectations Models

“…For example, one can use surveys on other macroeconomic variables, or use individual surveys to exploit more information than the mean, and one could combine surveys about the expectations of the central bank with those of the private sector in a monetary model. Another promising extension to our research would be to impose rationality bounds on adaptive learning as suggested by Marcet and Nicolini (). We leave these interesting extensions for future research.…”

Stock Market Volatility and Learning

“…In Section , we provide an explicit system of beliefs in which agents optimally update beliefs according to a special case of equation . Updating rule is more general and nests a range of learning schemes considered in the literature on adaptive learning, for example, least‐squares learning and the switching‐gains learning schemes used by Marcet and Nicolini ().…”

Monetary Policy Rules with Model and Data Uncertainty

“…Examples of papers in this area include Anderson, Hansen and Sargent 1997, Chung 1990, Granger and Deutsch 1992, Hansen and Sargent 1998, Marcet and Nicolini 1997, and Sargent 1998. Related papers in the area of learning are: Bray 1982, Bray and Kreps 1987, Kuan and White 1994, Marcet and Sargent 1989a,b, and Woodford 1990, while a review of the learning literature is in Marimon 1997.…”