The Macro Seminar:
Time: 12:15 pm – 13:30 pm
Date: 11th of September 2023

Room 3001

Guillaume ROCHETEAU (University of California at Irvine) “When Money Dies: The Dynamics of Speculative Hyperinflations”

Abstract :How fast can a fiat money become valueless? In a continuous-time monetary economy with trading frictions and CRRA preferences, a fiat money under speculative hyperinflation dies in finite time. Its lifespan shrinks as distrust (measured by the distance to the highest equilibrium) increases and as liquidity needs become more frequent. Contrarily, high seller’s market power, intense specialization, and active fiscal policies slow down the demise of money. If currencies compete, the times it takes for a speculative hyperinflation to trigger a dollarization, and for the full dollarization to be completed, vary with currency substitutability and rates of return.

Sponsors:
Julien PRAT  (CREST)