search query: @indexterm Hyper-inflation / total: 17
reference: 10 / 17
| Author: | Casella, A. Feinstein, S. |
| Title: | Economic exchange during hyperinflation. |
| Journal: | Journal of Political Economy
1990 : FEB, VOL. 98:1, p. 1-27 |
| Index terms: | HYPER-INFLATION TRADE |
| Language: | eng |
| Abstract: | A theoretical model of hyperinflation was constructed that focuses on individuals and their process of economic exchange. In the 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 on 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, it is shown 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. |
SCIMA