It seems to be a well-established ‘stylised fact’ that a currency has to perform very poorly indeed – to be more precise, it must inflate very rapidly – to induce its widespread abandonment in favour of some other currency. A related ‘stylised fact’ is that though it is reduced, the demand for a currency is often still quite substantial even when it hyperinflates. . . . If rapid inflations produce only limited substitution towards other currencies, the monetary authorities can ‘get away’ with a great deal of monetary ‘misbehaviour’ before the loss of market share to competing currencies poses any significant problem.
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