Misspecification versus Bubbles in Hyperinflation Data: Monte Carlo and Interwar European Evidence

This paper analyzes tests of the Cagan hyperinflation-money demand model that have several advantages relative to those in the literature. They do not confound specification error with rational bubbles, are implemented with a linear procedure, and are frequently able to detect periodically collapsing bubbles that have challenged existing tests. Read on for information on Hyperinflation, bubble and specification error.

Provided by: The Federal Reserve Board Topic: Software Date Added: Jan 1997 Format: PDF

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