Economic Theory

, Volume 29, Issue 1, pp 181–195 | Cite as

Competitive equilibrium hyperinflation under rational expectations

  • Fernando H. BarbosaEmail author
  • Alexandre B. Cunha
  • Elvia Mureb Sallum
Research Article


This paper shows that a competitive equilibrium model, where a representative agent maximizes welfare, expectations are rational and markets are in equilibrium can account for several hyperinflation stylized facts. The theory is built by combining two hypotheses, namely, a fiscal crisis that requires printing money to finance an increasing public deficit and a predicted change in an unsustainable fiscal regime.


Hyperinflation Rational expectations Competitive equilibrium Fiscal crisis 

JEL Classification Numbers

E31 E42 E63 


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Copyright information

© Springer-Verlag 2005

Authors and Affiliations

  • Fernando H. Barbosa
    • 1
    Email author
  • Alexandre B. Cunha
    • 2
  • Elvia Mureb Sallum
    • 3
  1. 1.Graduate School of EconomicsGetulio Vargas FoundationRio de JaneiroBrazil
  2. 2.IBMEC Business SchoolRio de JaneiroBrazil
  3. 3.Institute of Mathematics and StatisticsUniversity of São Paulo, Cidade UniversitáriaSão PauloBrazil

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