Zaïre’s Hyperinflation, 1990-96

April 1, 1997

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

This paper reviews Zaïre’s experience with hyperinflation during 1990-96 and develops an illustrative model based on a money demand function that includes government revenue as a determinant. Government revenue is itself subject to the “Tanzi effect,” in which inflation tends to lower revenue collections. The model is estimated over the 1990-96 period, and simulations are also presented. The paper concludes with a number of observations and policy recommendations for stopping hyperinflation in Zaïre.

Subject: Currencies, Expenditure, Hyperinflation, Inflation, Monetary base, Money, Prices

Keywords: Currencies, Europe, exchange rate, foreign exchange, government operation, government spending, Hyperinflation, Inflation, inflation rate, Monetary base, money stock, velocity of circulation, WP, Zaïrian authorities

Pages:
43
Volume:
1997
DOI:
https://doi.org/10.5089/9781451846935.001
Issue:
050
Series:
Working Paper No. 1997/050
Stock No:
WPIEA0501997
ISBN:
9781451846935
ISSN:
1018-5941

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