The Yugoslav Hyperinflation of 1992-1994: Causes, Dynamics, and Money Supply Process
19 Pages Posted: 10 Apr 2011 Last revised: 31 Jul 2013
Date Written: December 23, 1998
Abstract
The paper demonstrates that the Yugoslav hyperinflation, the second highest and the second longest episode in economic history, was driven by excessive money supply that monetized various deficits that emerged upon the disintegration of the country. The identified cointegrating relations showed that money growth was weakly exogenous and affected inflation via currency depreciation. This indicates the presence of exchangerate-based pricing, whereas the exogeneity of money implies that money was the common stochastic trend fueling currency depreciation and inflation. Money growth itself followed a random walk with a drift, which, together with its exogeneity, was a result of the Central Bank’s loss of control over the money supply process.
Keywords: Hyperinflation, Yugoslav inflation, inflation stabilization, Yugoslavia, Serbia and Montenegro
JEL Classification: E31,E51,P27
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Price Level Determinacy Without Control of a Monetary Aggregate
-
Money and Interest in a Cash-in-Advance Economy
By Robert E. Lucas and Nancy L. Stokey
-
Monetary Policy and Multiple Equilibria
By Jess Benhabib, Stephanie Schmitt-grohé, ...
-
Is the Price Level Determined by the Needs of Fiscal Solvency?
By Matthew B. Canzoneri, Robert E. Cumby, ...