The Modern Hyperinflation Cycle: Some New Empirical Regularities

December 7, 2018

Preview Citation

Format: Chicago

Jose Saboin. The Modern Hyperinflation Cycle: Some New Empirical Regularities, (USA: International Monetary Fund, 2018) accessed October 6, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Using a database of up to 62 variables for 196 countries over 57 years, a hyperinflation cycle has been characterized to propose a broader setting of stylized facts. Beyond the usual facts, the findings in this paper contribute to the literature of modern hyperinflations in that these cycles occur in contexts where there are (i) depressed economic freedoms, (ii) deteriorated socioeconomic conditions and rule of law, as well as (iii) high levels of domestic conflictivity and government instability. Despite social infraestructure factors improve during stabilization, they keep being substantially lower than the respresentative non-hyperinflation country, suggesting an important role for them in the occurrence of modern hypeinflations. Finally, the role of international financial assistance in stabilization was studied, noting that (i) a clear majority of hyperinflation countries used it, further improving their (ii) economic freedoms, and allowing themselves (iii) greater fiscal flexibility and (iv) more exchange rate stability.

Subject: Exchange rate arrangements, Exchange rates, External debt, Foreign exchange, Hyperinflation, Inflation, Prices

Keywords: Africa, Economic Freedoms, Exchange rate arrangements, Exchange rates, Hyperinflation, Hyperinflation cycle, Hyperinflation dynamics, Hyperinflation episode, Hyperinflation literature, Hyperinflation process, Improvement government stability, Inflation, Institutions, Multilateral Assistance, Representative country, Social Infrastructure, WP

Publication Details

Pages:

46
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/266
Stock No:

WPIEA2018266
ISBN:

9781484385388
ISSN:

1018-5941

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