The New Palgrave Dictionary of Economics

Living Edition
| Editors: Palgrave Macmillan


  • Juan Pablo Nicolini
Living reference work entry

Latest version View entry history



A hyperinflation occurs when price indexes of broadly defined baskets of goods increase at extremely high rates. As such, hyperinflations are rare. However, the few known cases share many things in common. First, they can occur only in paper currency systems that are not pegged by the central bank to any good. Second, they occur when the quantity of paper currency also grows at extremely high rates. Finally, the force behind the process is always a fiscal imbalance that is financed by issuing currency.


Bretton Woods system Budget deficits Commodity money Convertibility Fiat money Fisher, I. German hyperinflation Gold standard Hyperinflation Inflation Laffer curve Paper money Price control Price stability Quantity theory of money Seigniorage Stabilization policy Wage control 

JEL Classifications

D4 D10 
This is a preview of subscription content, log in to check access.


  1. Bruno, M., G. Di Tella, R. Dornbusch, and S. Fisher. 1988. Inflation stabilization: The experience of Argentina, Brazil, Israel and Mexico. Cambridge, MA: MIT Press.Google Scholar
  2. Bruno, M., S. Fisher, E. Helpman, and N. Liviatan. 1991. Lessons of economic stabililzation and its aftermath. Cambridge, MA: MIT Press.Google Scholar
  3. Cagan, P. 1956. The monetary dynamics of hyperinflation. In Studies in the quantity theory of money, ed. M. Friedman. Chicago: University of Chicago Press.Google Scholar
  4. Eckstein, Z., and L. Leiderman. 1992. Seigniorage and the welfare cost of inflation. Journal of Monetary Economics 29: 389–410.CrossRefGoogle Scholar
  5. Fisher, I. 1934. Stable money: A history of the movement. New York: Adelphi.Google Scholar
  6. Marcet, A., and J. Nicolini. 2003. Recurrent hyperinflations and learning. American Economic Review 93: 1476–1498.CrossRefGoogle Scholar
  7. Marcet, A., and J. Nicolini. 2005. Money and prices in models of bounded rationality in high-inflation economies. Review of Economic Dynamics 8: 452–479.CrossRefGoogle Scholar
  8. Sargent, T. 1992. The ends of four big inflations. In Rational expectations and inflation, 2nd ed. New York: Harper and Row.Google Scholar
  9. Zarazaga, C. 1993. Hyperinflation and moral hazard in the appropriation of seigniorage. Working paper, Federal Reserve Bank of Philadelphia.Google Scholar

Copyright information

© The Author(s) 2008

Authors and Affiliations

  • Juan Pablo Nicolini
    • 1
  1. 1.