Modern Hyper- and High Inflations

By Stanley Fischer, Ratna Sahay, Carlos A. Végh Gramont

November 1, 2002

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Stanley Fischer, Ratna Sahay, and Carlos A. Végh Gramont Modern Hyper- and High Inflations, (USA: International Monetary Fund, 2002) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Since 1947, hyperinflations (by Cagan’s definition) in market economies have been rare. Much more common have been longer inflationary processes with inflation rates above 100 percent per annum. Based on a sample of 133 countries, and using the 100 percent threshold as the basis for a definition of very high inflation episodes, this paper examines the main characteristics of such inflations. Among other things, we find that (i) close to 20 percent of countries have experienced inflation above 100 percent per annum; (ii) higher inflation tends to be more unstable; (iii) in high-inflation countries, the relationship between the fiscal balance and seigniorage is strong both in the short and longrun’s; (iv) inflation inertia decreases as average inflation rises; (v) high-inflation is associated with poor macroeconomic performance; and (vi) stabilizations from high inflation that rely on the exchange rate as the nominal anchor are expansionary.

Subject: Consumption, Fiscal policy, Fiscal stance, Government debt management, Hyperinflation, Inflation, National accounts, Prices, Public financial management (PFM)

Keywords: Africa, Caribbean, Consumption, Durable goods, Europe, Fiscal deficit, Fiscal stance, Government debt management, Growth, Hyperinflation, Inflation, Inflation country, Inflationary dynamics, Laffer curve, Money growth, Money-inflation link, Nominal exchange rate, Rate of inflation, South America, Stabilization, WP

Publication Details

Pages:

65
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/197
Stock No:

WPIEA1972002
ISBN:

9781451860023
ISSN:

1018-5941

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