The demand for money during hyperinflation : the Indonesian experience

Paltridge, Andrew Terence. (1985). The demand for money during hyperinflation : the Indonesian experience Honours Thesis, School of Economics, The University of Queensland.

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Author Paltridge, Andrew Terence.
Thesis Title The demand for money during hyperinflation : the Indonesian experience
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 1985-01-01
Thesis type Honours Thesis
Total pages 77
Language eng
Subjects 14 Economics
Formatted abstract
It was my intention to examine the historical construction of the demand function f or money during hyperinflation beginning with Cagan's [1950] adaptive expectations and finishing with Goodfriend [1982] implementing rational expectations. The effects of hyperinflation on the Indonesian economy were studied, together with the causes of a hyperinflation.

The following equations were estimated on the Indonesian data. The Cagan money demand function gives adaptive expectations

Ln(M/P)t=-α[(1-eT i=0  ∆ln Pt-ie-iβ

And the Goodfriend equation
InPt = β0 + β1lnPt-1 + β2lnPt-2

where β1=(α-1)/α       β2=1/α

This was done in order to make a comparison of the relative worth of adaptive and rational expectations as they relate to the Indonesian data.

The results from this seem to indicate that in this situation the adaptive expectations scheme provided the better estimations for the hyperinflation period while rational expectations improved for the more stable long run.

Document type: Thesis
Collection: UQ Theses (non-RHD) - UQ staff and students only
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Created: Mon, 22 Nov 2010, 22:22:03 EST by Ning Jing on behalf of The University of Queensland Library