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 29

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 β₁ as the "semi-elasticity" of the inflation rate. Do you see any problems with this interpretation?

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Definitions:

Competitive Inhibitors

Substances that bind to the active site of an enzyme, competing with the substrate and thus inhibiting enzyme activity.

Chemical Energy

The potential of a chemical substance to undergo a transformation through a chemical reaction, resulting in the release of energy.

Kinetic Energy

The energy that a body possesses due to its motion, dependent on the mass of the body and the square of its velocity.

Allosteric Site

A site on an enzyme other than the active site, to which a specific substance binds, thereby changing the shape and activity of the enzyme. Compare with active site.