The Greek Hyperinflation and Stabilization of 1943–1946

Abstract

The Greek hyperinflation started during the Axis occupation and was the result of an excessive reliance by the puppet government on the inflation tax. The inflation reached a peak in November 1944 after liberation. The Greek government undertook three stabilization efforts spread over eighteen months before price level stability was achieved. The final effort involved fiscal reform and the creation of an independent supracentral bank. Controversy surrounds the origin and nature of the transition costs involved in stabilizing an economy. The Greek stabilization cannot resolve all the issues raised.

When Is Stabilization Expansionary? Evidence from High Inflation

“…Sources: Chang (1958;China), Chou (1963;China, Taiwan), Dornbusch and Fischer (1986), League of Nations (1926; Poland), Maddison (1989;real GDP) and Mitchell (1978; real GDP and government revenue/expenditure), Makinen (1986;Greece), Nogaro (1948;Hungary 1945-6), Sargent (1982; Austria, Germany), Svennilson (1954; European output after the First World War), Vegh (1992;Hungary 1923-4, Austria, Germany, Taiwan).…”

Stopping High Inflation: An Analytical Overview

“…Furthermore, the 1/ Not all attempts to stop hyperinflation have been successful though. The most notable exception is Greece after World War II, where two attempts failed (see Makinen (1984)). …”

Hyperinflations: Their Origins, Development and Termination

“…and Makinen (1984Makinen ( , 1986 argue that the German and Greek hyperinflations this century were both ended only after several attempts, each of them credible by the available standards and measures of credibility.24 Eichengreen (1986), in his review of Sargent (1986), also points out that a proper assessment of the successful transition to price stability requires a detailed examination of the historical experience of each country concerned in order to isolate particular factors which may have made some attempts at monetary reform credible and others not.…”

“…Although some proxies for inflation expectations have been devised to ascertain whether the public anticipated the maintenance of inflation stabilization following reforms (e.g., Siklos 1989 and for the Hungarian episode of 1945-46), a variety of criticisms have been levelled at Sargent's interpretation of history and his assessment of the degree of success of several stabilization programs. and Makinen (1984Makinen ( , 1986 argue that the German and Greek hyperinflations this century were both ended only after several attempts, each of them credible by the available standards and measures of credibility.24 Eichengreen (1986), in his review of Sargent (1986), also points out that a proper assessment of the successful transition to price stability requires a detailed examination of the historical experience of each country concerned in order to isolate particular factors which may have made some attempts at monetary reform credible and others not.…”