Economic Exchange During Hyperinflation

Datos Bibliográficos

ID10179294
AutoresAlessandra Casella (Stanford University), Jonathan S Feinstein (Stanford University)
Año1990
Volumen98
Número1
Páginas1-27
Fecha de publicación1990-02-01
Peer ReviewedSí
Open AccessNo
TipoARTICLE
RevistaJournal of Political Economy (JOURNAL)
Identificadores de la revistaISSN: 0022-3808 • E-ISSN: 1537-534X
EditorialUniversity of Chicago Press (PUBLISHER • US)
DOI10.1086/261666
OpenAlexW2066734031
IdiomaEN
Citas recibidas4
Referencias citadas13

Historical evidence indicates that hyperinflations can disrupt individuals' normal trading patterns and impede the orderly functioning of markets. To explore these issues, we construct a theoretical model of hyperinflation that focuses on individuals and their process of economic exchange. In our model buyers must carry cash while shopping, and some transactions take place in a decentralized setting in which buyer and seller negotiate over the terms of trade of an indivisible good. Since buyers face the constant threat of incoming younger (hence richer) customers, their bargaining position is weakened by inflation, allowing sellers to extract a higher real price. However, we show that higher inflation also reduces buyers' search, increasing sellers' wait for customers. As a result, the volume of transactions concluded in the decentralized sector falls. At high enough rates of inflation, all agents suffer a welfare loss

Cash · Economics · Hyperinflation · Inflation (cosmology · Macroeconomics · Market economy · Microeconomics · Monetary economics · Monetary policy · Negotiation · Position (finance · Welfare · Economic theories and models · Economic Theory and Institutions · Experimental Behavioral Economics Studies · Finance