fbpx Revisiting Speculative Hyperinflations in Monetary Models | Harvard Kennedy School

Additional Authors:

  • Kenneth Rogoff

Excerpt

Revisiting Speculative Hyperinflations in Monetary Models. Kenneth Rogoff, May 4, 2017, Paper, "In an interesting and provocative paper in the Journal of Political Economy, John Cochrane (2011) examines a host of New Keynesian and micro-founded models of money demand, and finds them all guilty of arbitrarily assuming uniqueness when, in fact, the whole class of models is generically riddled with multiple-equilibrium problems. He concludes that only the "fiscal theory of the price level"–which posits that the price level simply follows from the government budget constraint–offers a coherent and rigorous theory of the value of money." Link