When money dies : The dynamics of speculative hyperinflations

Le Lemma organise un séminaire, sur le thème « When money dies: The dynamics of speculative hyperinflations » le jeudi 25 mai à 11h. 

Guillaume ROCHETEAU (University of California-Irvine)

Résumé : 

How fast can a fiat money become valueless? I answer this question by characterizing in closed-form speculative hyperinflation equilibria in continuous-time monetary economies. In the Shi (1995) and Trejos and Wright (1995) models, fiat money can become valueless in finite time. The lifespan of a money is shorter when its velocity is high and agents are impatient. The insights generalize to economies with divisible money. A high money growth rate raises the pace of speculative hyperinflation while seller's market power reduces it. If agents can adopt a foreign currency, an economy under speculative hyperinflation can achieve full dollarization in finite time.