Working Paper: NBER ID: w0635
Authors: Robert P. Flood; Peter M. Garber
Abstract: In this paper we provide additional evidence that process consistency may have materialized as a restrictive constraint on the money generation process. In addition to recomputing the time series of process consistency probabilities using new data from the German case, we also supply our empirical technique to the data from the other hyperinflations studied by Cagan. We interpret our results as evidence hearing on the type of transversality condition studied by Brock or by Brock and Scheinkman as a sufficient condition to insure a unique equilibrium in optimizing models with perfect foresight and money.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| probability of process consistency (C62) | monetary reform (E42) |
| monetary reform (E42) | probability of process consistency (C62) |
| process consistency (L15) | money generation process (E51) |
| timing of monetary reforms (E42) | process consistency (L15) |
| process consistency declines (L15) | initiation of reforms (O17) |