Social Sciences
4 years ago

Zimbabwe's Hyperinflation Linked to Money Supply Growth and Parallel Premiums

MPRA Paper
On the tracks of Zimbabwe’s Hyperinflation: A Quantitative Investigation
yavuz Han Topal

Paper Summary

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The article investigates the relationship between money supply growth and inflation in Zimbabwe using data from 1995 to 2006. The study shows that the main factors driving inflation in Zimbabwe are changes in money supply growth and movements in the parallel market premium. Surprisingly, the change in the 3-month-deposit rate has a positive effect on inflation, possibly due to government manipulation of the Treasury bill market. The research suggests that understanding these factors can help policymakers achieve price stability and economic growth in Zimbabwe.