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Bulgaria’s hyperinflation in 1997: transition, banking fragility and foreign exchange

Listed author(s):
  • Jonathan Marie


    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)

  • Sébastien Charles

    (LED - Laboratoire D'Economie Dionysien - LED - Université Paris 8)

This article has two objectives: to study the 1997 episode of hyperinflation in Bulgaria, and to compare and contrast this analysis with the post-Keynesian theoretical approach. This approach highlights the role of three components observed simultaneously in order to understand the emergence of hyperinflation: a virulent distributive conflict; the presence of indexing mechanisms; and finally, flight from domestic currency into one or more foreign currencies. The article reveals that a transitional economy like that of Bulgaria in the 1990s may generate hyperinflation in the absence of any violent distribution conflict: the transition and the banking crisis engender inflation. The foreign exchange rate is decisive in the emergence of hyperinflationary dynamics (and therefore mistrust of domestic currency). This interpretation of hyperinflation is confirmed by an econometric analysis.

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Paper provided by HAL in its series Post-Print with number hal-01573503.

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Date of creation: 2017
Publication status: Published in Post-Communist Economies, Taylor & Francis (Routledge), 2017, 29 (3), 〈〉. 〈10.1080/14631377.2017.1339476〉
Handle: RePEc:hal:journl:hal-01573503
DOI: 10.1080/14631377.2017.1339476
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