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How does hyperinflation shock the economy?: Panel VAR Approach

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  • Jun-Hyun Ko
  • Hiroshi Morita

Abstract

Using 48 country data for the period 1800-2010, we empirically investigate the effect of hyperinflations on the public debt, the primary surplus, and the real economy. Estimating a panal vector-autoregressive (VAR) model, we find that (i) hyperinflations permanently reduce public debt-to-GDP ratios; (ii) the reduction is closely related to the increase in the primary balances in response to hyperinflations; (iii) however, hyperinflations accompany dampening effects on the real economy, reducing GDP.

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  • Jun-Hyun Ko & Hiroshi Morita, 2015. "How does hyperinflation shock the economy?: Panel VAR Approach," Working Papers e090, Tokyo Center for Economic Research.
    • Handle: RePEc:tcr:wpaper:e90
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