The Hungarian Hyperinflation and Stabilization of 1945-1946

The End of the Hungarian Hyperinflation of 1945-1946

“…By contrast, Sargent (1986, ch. 3), Bomberger and Makinen (1983; hereafter B/ M), and Wicker (1986) did not account for possible changes in the natural rate of unemployment in their studies of hyperinflation, though they devoted some attention to possible sources of change in the unemployment rate. The reason is that the capital goods industry was the recipient of subsidies Elnanced by the inflation tax.…”

Hyperinflations: Their Origins, Development and Termination

“…Wicker (1986) has reconsidered the evidence from the end of hyperinflation in Poland, Austria and Hungary, following the dismemberment of the Habsburg monarchy, and found the increases in unemployment too large to be consistent with the natural rate view. Siklos (1989) found the unemployment effect of a sudden return to price stability in post-World War I1 Hungary rather small and, therefore, not inconsistent with Sargent's view (see also Bomberger and Makinen 1983), although many policy choices faced by the Hungarian government following the war would unlikely have arisen in more recent hyperinflationary experiences such as in, for example, South America. Garber (1982) argues that the assumption of a constant natural rate of unemployment underlying Sargent's hypothesis is misleading in the German case because a significant portion of the proceeds from the inflation tax went to the capital goods producing industry.…”

The Success of Currency Reforms to End Great Inflations: An Empirical Analysis of 34 High Inflations

“…But in spite of these adverse conditions it has been possible in several cases to re‐establish stable national currencies without severe increases of unemployment and with beneficial consequences for the real economy. This has been clearly shown by Sargent (1982) for four central European hyperinflations of the 1920s (compare also Makinen, 1984, for the Greek stabilization of 1946, and Bomberger and Makinen, 1983, for the Hungarian stabilization of 1946). On the other hand, quite a number of reforms ending hyperinflations have been far less successful than the four mentioned by Sargent.…”