Abstract
This chapter looks at the Zimbabwean economy during its hyperinflation episode. One of the main motivations behind this chapter is to illustrate how the macroeconomic instability as a result of the hyperinflation affected households, firms across all sectors, parastatals and public services in Zimbabwe. It also looks back to the decade prior to hyperinflation, laying out contributing factors to the hyperinflation episode.
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Notes
- 1.
These two estimates use different data sources, hence they come to slightly different figures of inflation but both agree that the highest month for inflation was November 2008. Our data set, which is described in Chap. 6, ends in October 2008. Â
- 2.
The Reserve bank was not independent, please refer to page 5, number 8 of the banking act. https://www.rbz.co.zw/documents/acts/rbz-act.pdf; https://www.rbz.co.zw/index.php/about-us/about-us/history.
- 3.
Without a balance of power between the executive, the legislature and judiciary, there was no institution within the government to act as the check on any commitments made by the government (Coltart 2008).
- 4.
The authors of Larochelle et al. (2014) construct the asset index using a polychoric principal component analysis from nationally representative household data from 2001 and 2007/2008. This asset index is calibrated using a well-being profile that is obtained from consumption expenditures. The variables included in the asset index meet two conditions, first that over time the returns are unlikely to change and second that the poor and non-poor can be differentiated based on the 2001 welfare measure which used per capita expenditures (Larochelle et al. 2014).
- 5.
The first time the government was challenged was in 2000, when the voters did not endorse a referendum put forth by Mugabe (Rutherford 2000). As a result, the government came down heavily on those who supported the opposition (Mutanda 2013). The leader of the opposition was harassed and also put in jail a number of times. There was no reason for people to believe that they would be treated differently in the 2008 election.
- 6.
The third Zimbabwean dollar had been introduced in August 2008.
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McIndoe-Calder, T., Bedi, T., Mercado, R. (2019). Hyperinflation in Zimbabwe. In: Hyperinflation in Zimbabwe. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-31015-8_2
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