The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

German Hyperinflation

  • Theo Balderston
Reference work entry


The erratic development of inflation in Germany during the First World War into the hyperinflation of 1922–3 has served as a major test-bed of monetary theory ever since. This article charts contemporary and modern explanations of its genesis, stabilization and effects. Modern analysis focuses on the interaction between fiscal and accommodating monetary policy and the expectations of financial asset holders; it disagrees, as did contemporaries, over the degree of agency of the government in determining its own deficit. After an optimistic ‘Keynesian’ assessment of its effects in growth, more recent scholarship has relapsed into pessimism as to its effects on investment.


Bubble German hyperinflation Germany, economics in the 20th century Gold standard Hyperinflation Inflation expectations Labour hoarding Money supply Public debt Quantity theory of money Rational expectations Seigniorage Velocity of circulation 

JEL Classifications

E31 E63 N14 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Theo Balderston
    • 1
  1. 1.