hyperinflation

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Hyperinflation

Hyperinflation

A very high rate of inflation, especially sustained over a long period of time. While there is no set numeric definition, it is associated with inflation percentages in the millions and billions. Hyperinflation is almost always caused by poor monetary policy on the part of the government. For example, a government that rapidly increases the money supply without a corresponding growth in GDP often undergoes hyperinflation. This situation often leads to (though it may also be caused by) wider economic instability, and may lead to a lack of confidence in the government. As a result, hyperinflation that persists for a long time may lead to the government issuing a new currency entirely.

hyperinflation

A very high level of inflation that tends to result in the breakdown of the monetary system, the hoarding of goods, and difficulty in achieving real economic growth. The classic case of hyperinflation occurred in Germany during the 1920s. Hyperinflation, which tends to motivate people to own real goods, adversely affects security prices.

hyperinflation

a very high level of INFLATION.

hyperinflation

a situation of high and accelerating rates of INFLATION. Unlike CREEPING INFLATION, which usually has little ill-effect on the functioning of the economy, hyperinflation reflects a situation where people begin to lose confidence in the value of MONEY and revert to BARTER. At this point there is a serious danger of economic collapse, accompanied by growing social disorder. Hyperinflation is a rare phenomenon, but when it does occur its causes are as much political as economic: for example, the excessive printing of money to finance government spending (during wars, in particular) or an acute shortage of goods and services combined with a large pent-up demand, as in periods immediately following the ending of a war.
References in periodicals archive ?
Cagan finds that in times of hyperinflation, because the fluctuation in prices is so extreme, the rate of inflation becomes the most important determinant.
Asilis, Honohan, and McNelis (1993) provide a similar study of hyperinflation and money demand in another Latin American country, Bolivia.
This reflects the fact that real money balances fell during the hyperinflation.
This price index ratio appears a good proxy in their studies of the post--WW I German hyperinflation as well as of the 1980 hyperinflationary episodes in Israel and several Latin American countries.
For future work, it may be of interest to apply our theoretical and empirical framework to other hyperinflationary experiences, such as the post-WW I German hyperinflation and the 1980s episodes in Israel and several Latin American countries.
Tallman and Wang (1995) further contrast the post-WW I German and the post-WW II Chinese hyperinflation experiences in the impulse responses of money and prices.
The 20th century witnessed 28 hyperinflations (Bernholz 2003: 8).
Most hyperinflations (17) occurred in Eastern Europe and Central Asia, with Latin America accounting for 5 and Western Europe for 4.
TABLE 1 ZIMBABWE'S HYPERINFLATION Date Month-over-month Year-over-year inflation rate (%) inflation rate (%) March 2007 50.
In Zimbabwe, President Robert Mugabe simply looked the other way as the hyperinflation roared ahead.
The lack of foreign credit has contributed to the development of hyperinflations in the past.
Through its use as a political device, hyperinflations in the past have shown that it is generally the political opposition (and their supporters) that suffer most.