Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25439
Authors: 
Adam, Klaus
Evans, George W.
Honkapohja, Seppo
Year of Publication: 
2003
Series/Report no.: 
CFS Working Paper 2004/15
Abstract: 
Earlier studies of the seigniorage inflation model have found that the high-inflation steady state is not stable under adaptive learning. We reconsider this issue and analyze the full set of solutions for the linearized model. Our main focus is on stationary hyperinflationary paths near the high-inflation steady state. The hyperinflationary paths are stable under learning if agents can utilize contemporaneous data. However, in an economy populated by a mixture of agents, some of whom only have access to lagged data, stable inflationary paths emerge only if the proportion of agents with access to contemporaneous data is sufficiently high.
Subjects: 
Indeterminacy
inflation
stability of equilibria
seigniorage
JEL: 
C62
D83
D84
E31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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