Hyperinflation: what causes it, how to prevent it & how to stop it - EP158

Economics Explored

What causes hyperinflation and how can it be avoided in the first place or stopped if it occurs? What characterizes countries which fall victim to hyperinflation? A conversation between show host Gene Tunny and his colleague Arturo Espinoza which explores the economic theory and evidence around hyperinflation, and discusses peculiarities which can arise in hyperinflation-afflicted economies - e.g. pensions denominated in cows in Zimbabwe.

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Links relevant to the conversation

Current inflation rates around the world:

https://tradingeconomics.com/country-list/inflation-rate?continent=world

What is hyperinflation and should we be worried? (WEF article from June 2022):

https://www.weforum.org/agenda/2022/06/hyperinflation-inflation-interest-rate/

Wikipedia entry for former Peruvian President Alberto Fujimori

https://en.wikipedia.org/wiki/Alberto_Fujimori

Why a Zimbabwean firm offers pensions denominated in cows | The Economist

https://www.economist.com/middle-east-and-africa/2022/05/14/why-a-zimbabwean-firm-offers-pensions-denominated-in-cows

The Modern Hyperinflation Cycle: Some New Empirical Regularities (IMF Working paper from 2018):

https://www.imf.org/en/Publications/WP/Issues/2018/12/07/The-Modern-Hyperinflation-Cycle-Some-New-Empirical-Regularities-46368

Chris Edmond’s note on Cagan’s model of hyperinflation:

https://pages.stern.nyu.edu/~cedmond/ge07pt/notes_cagan.pdf

Alberto Alesina and Lawrence H. Summers’ paper Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence:

https://www.jstor.org/stable/2077833

Bitcoin Could Solve Zimbabwe’s Hyperinflation Problem—Instead, The Country Is Telling Impoverished Citizens To ‘Just Buy Gold’ (Forbes article):

https://www.forbes.com/sites/martinrivers/2022/07/27/bitcoin-could-solve-zimbabwes-hyperinflation-problem--instead-the-country-is-telling-impoverished-citizens-to-just-buy-gold/?sh=179b8f8b66d2

Inflation is spiking in Zimbabwe (again). Why high interest rates aren’t the answer (Conversation article by Jonathan Munemo):

https://theconversation.com/inflation-is-spiking-in-zimbabwe-again-why-high-interest-rates-arent-the-answer-187362

Credits

Thanks to Josh Crotts for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au.

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