Hyperinflation and Stabilization in FR Yugoslavia: 1992-1994

Abstract

This paper contributes to the literature on hyperinflation and stabilizations by analyzing the great Yugoslav hyper-inflation and stabilization during the period 1992 to 1994. The paper makes three contributions. First, it provides updated and more accurate estimates of key economic variables on economic activity, public finances, and sei-gniorage revenues during hyperinflation based on most recent and updated data. Second, it identifies and ana-lyzes salient features, causes, transmission mechanisms, and monetary consequences of the extreme Yugoslav hyperinflation in the period 1992-1994. It discusses what we call the fundamental equations of the Yugoslav hyperinflation and their implications for inflation expectations and subsequent stabilization. And third, it analyzes the implementation, achievements, and challenges of the currency reform and stabilization program that ended hyperinflation, highlighting the roles of the currency board, currency reform, and of the architect of the program, Dragoslav Avramović, the then governor of the Central Bank of FR Yugoslavia.

Keywords: Yugoslav hyperinflation, Stylized facts, Causes and dynamics, Currency reform, Stabilization program.

JEL: E31, E63, E65.