The Georgian Hyperinflation and Stabilization
May 1, 1999
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Summary
This paper anlayzes the Georgian hyperinflation of 1993-94, which featured endogenous fiscal expenditures and the money supply, depreciation, and currency substitution. Hyperinflation was stopped by removing generalized consumer subsidies and tightening of monetary policy, and not by a sudden rush of credibility or imposition of an exchange rate anchor. A de facto exchange rate anchor served ex post as a vehicle for building credibility, which ensured a dramatic reversal of currency substitution when the currency reform was implemented. The paper also discusses the relatively rapid output recovery in Georgia.
Subject: Currencies, Exchange rates, Foreign exchange, Hyperinflation, Inflation, Monetary base, Money, Prices
Keywords: broad money, central bank, coupon economy, coupon exchange rate vis-à-vis, coupon inflation, coupon price inflation, coupon vis-à-vis, Currencies, exchange rate, exchange rate depreciation, exchange rate vis-à-vis, Exchange rates, Georgia price liberalization, Hyperinflation, Inflation, Monetary base, nominal exchange rate, real value, ruble exchange rate, unit of account, WP
Pages:
34
Volume:
1999
DOI:
Issue:
065
Series:
Working Paper No. 1999/065
Stock No:
WPIEA0651999
ISBN:
9781451848663
ISSN:
1018-5941
