The Yugoslav Hyperinflation of 1992-1994: Causes, Dynamics, and Money Supply Process

19 Pages Posted: 10 Apr 2011 Last revised: 31 Jul 2013

See all articles by Pavle Petrovic

Pavle Petrovic

University of Belgrade

Zeljko Bogetic

World Bank

Zorica L. Mladenovic

University of Belgrade

Date Written: December 23, 1998


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

Petrovic, Pavle and Bogetic, Zeljko and Mladenovic, Zorica L., The Yugoslav Hyperinflation of 1992-1994: Causes, Dynamics, and Money Supply Process (December 23, 1998). Journal of Comparative Economics, Vol. 27, p. 335, 1999, Available at SSRN:

Pavle Petrovic (Contact Author)

University of Belgrade ( email )

Kamenicka 6
Faculty of Economics and CES Mecon
11000 Belgrade

Zeljko Bogetic

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Zorica L. Mladenovic

University of Belgrade ( email )

Studentski trg 1
Belgrade, 11000

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