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Credit-Fueled Demand and Shrinking Aggregate Supply: A Study on the Hyperinflation in Venezuela

Author

Listed:
  • Juan Barredo-Zuriarrain

    (UPV / EHU - Universidad del País Vasco [Espainia] / Euskal Herriko Unibertsitatea [España] = University of the Basque Country [Spain] = Université du pays basque [Espagne])

Abstract

Money supply adapts to the demand of credit and has a crucial impact in determining production levels. However, at the same time, under certain conditions the issuance of money may also boost inflation. In this article, with the help of Shaikh's ‘classical theory', we explain the main reasons for the recent hyperinflation experienced in Venezuela. On the supply side, we analyze the context of loss of competitiveness due to the overvaluation of the national currency. On the other hand, we explore how the credit to the oil company (PDVSA) has led to an exponential growth in aggregate demand.

Suggested Citation

  • Juan Barredo-Zuriarrain, 2024. "Credit-Fueled Demand and Shrinking Aggregate Supply: A Study on the Hyperinflation in Venezuela," Post-Print halshs-03634378, HAL.
    • Handle: RePEc:hal:journl:halshs-03634378
    DOI: 10.1080/09538259.2022.2037932
    as

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