Many Countries That Experience Hyperinflation Do Not Have Market-Determined Interest $$m = \beta _ { 0 } \times ( 1 + \Delta \ln P ) ^ { \beta _ { 1 } } \times e ^ { u }$$

question 25

Essay

Many countries that experience hyperinflation do not have market-determined interest
rates.As a result, some authors have substituted future inflation rates into money demand
equations of the following type as a proxy: $$m = \beta _ { 0 } \times ( 1 + \Delta \ln P ) ^ { \beta _ { 1 } } \times e ^ { u }$$
( $m$ is real money, and $P$ is the consumer price index).
Income is typically omitted since movements in it are dwarfed by money growth and the inflation rate. Authors have then interpreted $\beta _ { 1 }$ as the "semi-elasticity" of the inflation rate. Do you see any problems with this interpretation?

---

Definitions:

Enforced

The act of implementing or compelling compliance with a law, rule, or obligation.

Consideration

Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Hamer v. Sidway

A significant case in contract law that established the notion that forbearance (refraining from doing something) can be considered a valuable consideration in a contract.

Sufficient Consideration

A necessary element in contract law where something of value is exchanged between parties to form a valid contract.