How Does Hyperinflation Happen?
People no longer want to hold money or price things in it.
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1.What is hyperinflation?
People no longer want to hold money or price things in it.
2.What is Cagan's classic line for hyperinflation?
A hyperinflation starts in the first month prices rise by more than 50 percent (Cagan 1956, cited by the IMF).
3.At exactly 50 percent a month, bread costing 2 costs what after three months?
It costs 3 after one month, then 4.50, then 6.75; after a year about 259, roughly 130 times the starting price.
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Sources (4)
- IMF Working Paper WP/07/99 (Coorey, Clausen u. a.): Lessons from High Inflation Episodes for Stabilizing the Economy in Zimbabwe (2007)
- IMF Working Paper WP/10/106 (Jácome, Lönnberg): Implementing Official Dollarization (2010)
- Deutsche Bundesbank: Inflation - lessons learnt from history (15.10.2012)
- Eigene Berechnung (Python)
Education only. Not financial advice.