The mechanism of double exponential growth in hyper-inflation
Abstract
Analyzing historical data of price indices we find an extraordinary growth phenomenon in several examples of hyper-inflation in which price changes are approximated nicely by double-exponential functions of time. In order to explain such behavior we introduce the general coarse-graining technique in physics, the Monte Carlo renormalization group method, to the price dynamics. Starting from a microscopic stochastic equation describing dealers' actions in open markets we obtain a macroscopic noiseless equation of price consistent with the observation. The effect of auto-catalytic shortening of characteristic time caused by mob psychology is shown to be responsible for the double-exponential behavior.
Keywords
Cite
@article{arxiv.cond-mat/0112441,
title = {The mechanism of double exponential growth in hyper-inflation},
author = {Takayuki Mizuno and Misako Takayasu and Hideki Takayasu},
journal= {arXiv preprint arXiv:cond-mat/0112441},
year = {2009}
}
Comments
9 pages, 5 figures and 2 tables, submitted to Physica A