Expectations in an open economy hyperinflation: evidence from Germany 1921-23

We reconsider the Beladi et al. (1993) technique to measure
expectations in hyperinflation episodes by allowing money to be
substitutable with foreign assets as well as goods. We determine new
correctness conditions for adaptive and rational expectations formation
in this context and show that, taking into account these conditions, the
data for the German hyperinflation of the 1920s is consistent with
rational expectation formation.