In this book, we look at the case of hyperinflation in Zimbabwe, showing how a number of decisions made by the government initiated the episode of hyperinflation between 2006 and 2008. Through using a new price series dataset, we show that the money base expanded considerably from 2000, in parallel with growing budget deficits. The mechanisms to address hyperinflation are clear. Stabilisation programmes play a central role, especially the anchoring of inflation expectations through credible monetary policy. In the case of Zimbabwe, while a change in regime was initiated, it was only partially followed though. As a result, Zimbabwe in 2019 is again in a precarious situation. There is a need to re-invigorate these reforms, including increasing tax revenues and containing expenditure, in order to avoid a recurrence of hyperinflation.
KeywordsZimbabwe Hyperinflation Budget deficit GDP Stabilisation
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