Can the Release of a Monetary Overhang Trigger Hyperinflation?

36 Pages Posted: 15 Feb 2006

See all articles by Shoukang Lin

Shoukang Lin

affiliation not provided to SSRN

Kent Osband

Independent

Date Written: March 1992

Abstract

It is widely feared that, once prices are decontrolled in the formerly centrally-planned economies, households` release of previously accumulated money will trigger a hyperinflation. This paper finds, instead, that whether a country`s fiscal, monetary, and labor market policies are destabilizing typically does not depend on the money stock. However, the release of a monetary overhang can precipitate a large initial real wage shock. To the extent such a shock is not feasible politically, there is a motive for monetary reform, which must be weighed against the cost of reduced public confidence in money.

JEL Classification: E31, E63, P22

Suggested Citation

Lin, Shoukang and Osband, Kent, Can the Release of a Monetary Overhang Trigger Hyperinflation? (March 1992). Available at SSRN: https://ssrn.com/abstract=884665 or http://dx.doi.org/10.2139/ssrn.884665

Shoukang Lin (Contact Author)

affiliation not provided to SSRN

No Address Available

Kent Osband

Independent

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