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

Abstract

The estimation of an ordered probit model for currency reforms trying to end 31 hyperinflations and three big inflations of the 20 th century shows that the introduction of an independent central bank and the adoption of a credibly fixed exchange rate are crucial for the success of a currency reform. In addition, currency reforms are demonstrated to be more difficult in centrally planned economies than in market economies.JEL: E31, E58, E65

The Monetary Analysis of Hyperinflation and the Appropriate Specification of the Demand for Money

“… 4. The data for the highest monthly inflation rates in Yugoslavia, Zimbabwe, Hungary and Weimar Germany can be found in Hanke and Kwok (2009) and Bernholz and Kugler (2009). The corresponding daily inflation rates and the time required for prices to double are the results of our own calculations. …”