HyperinflationinZimbabwe-FederalReserveBankofDallas.pdfVIP

2 Federal Reserve Bank of Dallas ? Globalization and Monetary Policy Institute 2011 Annual Report Hyperinflation in Zimbabwe countries. Zimbabwe, once considered the bread- basket of Africa, was reduced to the continent’s beg- gar within a few years; its citizens were pushed into poverty and often forced to emigrate. The country’s experience shows how a relatively self-sustaining nation at independence fell victim to out-of-control inflation and the severe erosion of wealth. The causes of Zimbabwe’s hyperinflation, its effects and how it was stopped are particularly instructive. In his seminal work, Phillip Cagan defined hyperinflation as beginning when monthly inflation rates initially exceed 50 percent. It ends in the month before the rate declines below 50 percent, where it The historic Zimbabwean $100 trillion bill is now a novelty item. must remain for at least a year (Cagan 1956). Zim- One hundred trillion dollars—that’s babwe entered the hyperinflationary era in March 100,000,000,000,000—is the largest