## Zaïre’s Hyperinflation, 1990-96

_IMF Working Papers, April 1, 1997_

## Source details

**Canonical URL:** [Zaïre’s Hyperinflation, 1990-96](https://www.imf.org/en/publications/wp/issues/2016/12/30/zares-hyperinflation-1990-96-2174)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/30/zares-hyperinflation-1990-96-2174/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/30/zares-hyperinflation-1990-96-2174/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/30/zares-hyperinflation-1990-96-2174/bundle-manifest.json)

## Bibliographic details
- Authors: Philippe Beaugrand
- Published: April 1, 1997
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451846935.001

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### Summary
- This paper reviews Zaïre’s experience with hyperinflation during 1990-96.
- Develops an illustrative model based on a money demand function that includes government revenue as a determinant.
- Notes that government revenue is 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 presented.
- Concludes with observations and policy recommendations for stopping hyperinflation in Zaïre.

### Model and Estimation
- Core modeling approach: money demand function that incorporates government revenue as a determinant.
- Government revenue dynamics: explicitly modeled to capture the Tanzi effect (inflation-induced erosion of revenue collections).
- Empirical scope: model estimated over the 1990-96 period.
- Analysis includes simulation exercises based on the estimated model.

### Key Findings
- Hyperinflation dynamics in Zaïre during 1990-96 are driven by interactions between money demand, monetary base, and government revenue.
- The Tanzi effect plays a material role in reducing government revenue during periods of high inflation.
- Simulations illustrate the model-consistent paths of monetary variables and fiscal-revenue responses over the 1990-96 sample.

### Policy Recommendations
- The paper concludes with a number of observations and policy recommendations aimed at stopping hyperinflation in Zaïre.
- Recommendations are oriented toward restoring monetary and fiscal balance by addressing:
  - stabilization of money demand and monetary base dynamics;
  - mitigation of the Tanzi effect on government revenue;
  - coordinated fiscal and monetary measures to break inflationary feedback loops.

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## Content in this bundle

- **Zaire's Hyperinflation, 1990-96 - WP/97/50**
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  - [Zaire's Hyperinflation, 1990-96 - WP/97/50 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/_wp9750.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/zares-hyperinflation-1990-96-2174_