RATIONAL BUBBLES DURING POLAND HYPERINFLATION - IMPLICATIONS AND EMPIRICAL-EVIDENCE

It has been argued that the Polish hyperinflation at the end of the ei ghties was too excessive to be attributed to market fundamentals only. In this paper a range of indirect non-structural and structural tests for rational, exploding deterministic and stochastic bubbles are carr ied out. We adopt a new strategy based on the work of Hall and Sola (1 993a) which allows for the possibility of switching regimes in the tim e series properties of the data to allow for both indirect tests and s tructural tests for the presence of stochastic bubbles.