The Georgian Hyperinflation and Stabilization

34 Pages Posted: 13 Feb 2006

See all articles by Jian-Ye Wang

Jian-Ye Wang

International Monetary Fund (IMF) - European Department

Date Written: May 1999


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.

Keywords: Hyperinflation, Stabilization, Exchange Rate Anchor, Credibility, Resumption of Growth

JEL Classification: E31, E65, F41

Suggested Citation

Wang, Jian-Ye, The Georgian Hyperinflation and Stabilization (May 1999). IMF Working Paper, Vol. , pp. 1-34, 1999. Available at SSRN:

Jian-Ye Wang (Contact Author)

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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