Modern Hyper- and High Inflations

69 Pages Posted: 6 Feb 2006

See all articles by Ratna Sahay

Ratna Sahay

International Monetary Fund (IMF) - Developing Country Studies Division; National Bureau of Economic Research (NBER)

Carlos A. Vegh

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS); University of Maryland - Department of Economics; University of California at Los Angeles; National Bureau of Economic Research (NBER)

Stanley Fischer

Bank of Israel; National Bureau of Economic Research (NBER); International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2002

Abstract

Since 1947, hyperinflations (by Cagan's definition) in market economies have been rare. Much more common have been longer inflationary processes with inflation rates above 100 percent per annum. Based on a sample of 133 countries, and using the 100 percent threshold as the basis for a definition of very high inflation episodes, this paper examines the main characteristics of such inflations. Among other things, we find that (i) close to 20 percent of countries have experienced inflation above 100 percent per annum; (ii) higher inflation tends to be more unstable; (iii) in high-inflation countries, the relationship between the fiscal balance and seigniorage is strong both in the short and longrun's; (iv) inflation inertia decreases as average inflation rises; (v) high-inflation is associated with poor macroeconomic performance; and (vi) stabilizations from high inflation that rely on the exchange rate as the nominal anchor are expansionary.

Keywords: Fiscal deficit, inflationary dynamics, stabilization, growth

JEL Classification: F41, E63

Suggested Citation

Sahay, Ratna and Vegh, Carlos A. and Fischer, Stanley, Modern Hyper- and High Inflations (November 2002). IMF Working Paper No. 02/197, Available at SSRN: https://ssrn.com/abstract=880323

Ratna Sahay

International Monetary Fund (IMF) - Developing Country Studies Division ( email )

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Washington, DC 20431
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National Bureau of Economic Research (NBER)

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Carlos A. Vegh

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

1740 Massachusetts Avenue, NW
Washington, DC 20036-1984
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University of Maryland - Department of Economics ( email )

College Park, MD 20742
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University of California at Los Angeles ( email )

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Los Angeles, CA 90095-1477
United States
310-825-7371 (Phone)
310-825-9528 (Fax)

HOME PAGE: http://vegh.sscnet.ucla.edu

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Stanley Fischer

Bank of Israel ( email )

P.O. Box 780
Jerusalem, 91907
Israel

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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