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Hyperinflation Theories: An Abridged Survey

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According to Cagan’s definition hyperinflation starts in a month when the price level increases at least by 50 % and it ends when the price level drops below 50 % and stays there by at least one year. This was Cagan’s empirical criteria to select episodes of hyperinflation. Using this definition Hanke and Krus (2013) were able to identify 56 episodes of hyperinflation worldwide since the first one in France (1796) up to the last one that occurred in Zimbabwe (2007). However, this number should be taken as a lower bound estimate if one takes into account a proper definition of hyperinflation. I will define hyperinflation as a pathology that arises when the price of money goes to zero in finite time.


  • Rational Expectation
  • Fiscal Deficit
  • Adaptive Expectation
  • Fiscal Crisis
  • Monetary Growth

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  1. 1.

    The solution of the adaptive expectation mechanism differential equation is given by: π e(t) =  t β π e β(tx) dx,  t β e β(tx) dx = 1.

  2. 2.

    Kalecki’s (1962, p. 277) states that “\(\dot{M}\) is the increase in the money in circulation per unit of time which occurs trough the channels of budget deficit and the expansion of banking credit to business.”

  3. 3.

    When 1 −α β < 0 there is a possibility of a hyperdeflation bubble.


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Barbosa, F.d. (2017). Hyperinflation Theories: An Abridged Survey. In: Exploring the Mechanics of Chronic Inflation and Hyperinflation. SpringerBriefs in Economics. Springer, Cham.

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