The Ends of Four Modern Hyperinflations



Shifflett, Zachary

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In Thomas Sargent’s 1982 journal the Ends of Four Big Inflations, he conducted several case studies on historic hyperinflations occurring in the early to mid-1900s. This thesis draws large amounts of inspiration from this and Sargent’s other work by utilizing a case study approach to analyze four more hyperinflationary crises occurring in the modern era (1990s-present). For each of these cases, this thesis observes the instrumental role fiscal-monetary elements such as fiscal responsibility, central bank independence, and credibility play in both the formation and conclusion of these modern crises. While each of these crises were preceded by differing domestic conditions, actions conducted by each nation’s fiscal-monetary regime would result in the abandonment of these key elements ultimately triggering each case of hyperinflation. This thesis contains two chapters. Chapter one briefly introduces the three main fiscal-monetary elements by describing the various implications resulting from either the retainment or abandonment of them. Chapter two presents the formation and conclusion of the hyperinflation crises of Zimbabwe, Yugoslavia, Armenia, and Venezuela with an exploration of the actions conducted by the fiscal-monetary regime of each country. Venezuela’s case does not include details on the conclusion of the hyperinflation due the crisis being ongoing. This case instead demonstrates how the non-reestablishment of key fiscal-monetary elements contributes to the continuation of the crisis.



Hyperinflation, Fiscal expenditure, Central bank independence, Fiscal-monetary theories of inflation