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Hyperinflation after the First World War in Central Europe: Causes, Remedies, Consequences

Author

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  • Harold James

    (Princeton University)

Abstract

The paper examines in detail Germany and Poland, two of the four post-First World War hyperinflations that provided the subject of Thomas Sargent's classic comparative study of the circumstances in which inflations might be ended. It counterposes the Czechoslovak case, where stabilisation occurred without prior hyperinflation. Stabilisation brought substantial costs, most obviously in terms of recession and unemployment. The peripheral inflating countries had sought to use inflation to effect an international as well as an internal redistribution of wealth. Ending the inflation was thus politically costly, and usually involved ceding some aspect of sovereignty or limiting the room for domestic political manoeuvre. Hence many inflations were not really ended, but produced premature celebrations before a relapse, accompanied by a move against external control.

Suggested Citation

  • Harold James, 2024. "Hyperinflation after the First World War in Central Europe: Causes, Remedies, Consequences," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 23(4), pages 54-68.
    • Handle: RePEc:mnb:finrev:v:23:y:2024:i:4:p:54-68
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    References listed on IDEAS

    as
    1. Wicker, Elmus R, 1986. "Terminating Hyperinflation in the Dismembered Habsburg Monarchy," American Economic Review, American Economic Association, vol. 76(3), pages 350-364, June.
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    More about this item

    Keywords

    hyperinflation; inflation shocks; stabilisation; disinflation; monetary policy; fiscal policy; post-First World War;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • P44 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation

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