Expectations in an open economy hyperinflation: Evidence from Germany 1921–23

Alessio Reghezza, Elena Seghezza, John Thornton

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We reconsider the Beladi et al. (1993) technique to measure expectations in hyperinflation episodes by allowing money to be substitutable with foreign assets as well as goods. We determine new correctness conditions for adaptive and rational expectations formation in this context and show that, taking into account these conditions, the data for the German hyperinflation of the 1920s is consistent with rational expectation formation.
Original languageEnglish
Article number109176
Number of pages3
JournalEconomics Letters
Early online date25 Apr 2020
Publication statusPublished - Jul 2020

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