Unbundling Zimbabwe's Journey to Hyperinflation and Official Dollarization
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Uncertainty and Hyperinflation: European Inflation Dynamics After World War I
FEDERAL RESERVE BANK OF SAN FRANCISCO WORKING PAPER SERIES Uncertainty and Hyperinflation: European Inflation Dynamics after World War I Jose A. Lopez Federal Reserve Bank of San Francisco Kris James Mitchener Santa Clara University CAGE, CEPR, CES-ifo & NBER June 2018 Working Paper 2018-06 https://www.frbsf.org/economic-research/publications/working-papers/2018/06/ Suggested citation: Lopez, Jose A., Kris James Mitchener. 2018. “Uncertainty and Hyperinflation: European Inflation Dynamics after World War I,” Federal Reserve Bank of San Francisco Working Paper 2018-06. https://doi.org/10.24148/wp2018-06 The views in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the Federal Reserve Bank of San Francisco or the Board of Governors of the Federal Reserve System. Uncertainty and Hyperinflation: European Inflation Dynamics after World War I Jose A. Lopez Federal Reserve Bank of San Francisco Kris James Mitchener Santa Clara University CAGE, CEPR, CES-ifo & NBER* May 9, 2018 ABSTRACT. Fiscal deficits, elevated debt-to-GDP ratios, and high inflation rates suggest hyperinflation could have potentially emerged in many European countries after World War I. We demonstrate that economic policy uncertainty was instrumental in pushing a subset of European countries into hyperinflation shortly after the end of the war. Germany, Austria, Poland, and Hungary (GAPH) suffered from frequent uncertainty shocks – and correspondingly high levels of uncertainty – caused by protracted political negotiations over reparations payments, the apportionment of the Austro-Hungarian debt, and border disputes. In contrast, other European countries exhibited lower levels of measured uncertainty between 1919 and 1925, allowing them more capacity with which to implement credible commitments to their fiscal and monetary policies. -
Reserve Bank of Malawi Reserve Bank of Malawi Reserve Bank of Malawi Reserve Reserve Bank of Malawi Reserve Bank Of
Report and Accounts 2010 RBM Reserve Bank of Malawi Reserve Bank of Malawi Reserve Bank of Malawi Reserve Reserve Bank of Malawi Reserve Bank of RESERVE BANK OF MALAWI REPORT AND ACCOUNTS FOR THE YEAR ENDED 31ST DECEMBER 2010 2 Report and Accounts RBM RESERVE BANK OF MALAWI REPORT AND ACCOUNTS FOR THE YEAR ENDED 31ST DECEMBER 2010 3 Report and Accounts 2010 RBM BOARD OF DIRECTORS Dr. Perks M. Ligoya Governor & Chairman of the Board Mrs Mary C. Nkosi Deputy Governor Mrs. Betty Mahuka Mr. Gautoni Kainja Mr. Joseph Mwanamveka Board Member Board Member Board Member Dr. Patrick Kambewa 4 Board Member Mr. Ted. Sitimawina Board Member Report and Accounts RBM MISSION STATEMENT As the central Bank of the Republic of Malawi, we are committed to promoting monetary stability and soundness of the financial system. In pursuing these goals, we shall endeavour to carry out our duties professionally and exclusively in the long-term interest of the national economy. To achieve this, we shall be a team of professionals dedicated to international standards in the delivery of our services. 5 Report and Accounts 2010 RBM EXECUTIVE MANAGEMENT Dr. Perks M. Ligoya Governor Mrs. Mary C. Nkosi Deputy Governor Dr. Grant P. Kabango Acting General Manager, Economic Services 6 Report and Accounts RBM 7 Report and Accounts 2010 RBM HEADS OF DEPARTMENTS Banda, L. (Ms) Director, Banking and Payment Systems Chitsonga, D Director, Information and Communication Technology Chokhotho, R. Director, Human Resources Goneka, E. Director, Research and Statistics Kabango G.P. (Dr) Director, Special Duties Kajiyanike, M. (Ms) Director, Currency Management Malitoni, S. -
12. the Recent Crisis – and Recovery – of the Argentine Economy: Some Elements and Background
12. The Recent Crisis – and Recovery – of the Argentine Economy: Some Elements and Background Arturo O’Connell ______________________________________________________________ INTRODUCTION The Argentine crisis could be examined as one more crisis of the developing countries – admittedly a star pupil that had received praise from many sides – hit by the vagaries of the international financial markets and/or its own policy mistakes. To a great extent that is a line of argument that could provide some illumination. However, it could be even more interesting to examine the peculiarities of the Argentine experience – always in that general context –that have made it such an intractable case for normal medication. Not only would it be best to pin down those peculiarities and their consequences, but also it is necessary to understand that they were not just a result of the eccentricities of some people in some far-off Southern end of the world. Finance, both external and domestic, is one essential part of the story. Argentina became one of the most highly liberalized financial systems in the world. Capital could freely flow in and out without even clear registration demands; big firms profited from such a system by being able to finance themselves – at cheaper financial costs – in the international market at the same time that wealthy families chose to hold a significant proportion of their liquid assets abroad. The domestic banking system was opened to foreign entry to the point of not requiring the habitual reciprocity with third countries and a large and increasing proportion of the operations became denominated in foreign currency. To build up confidence in the local currency a hard peg to the US dollar was instituted by law rather than by Executive Order and the Central Bank became a mere currency board issuing currency at the legally determined rate only against foreign exchange. -
On the Measurement of Zimbabwe's Hyperinflation
18485_CATO-R2(pps.):Layout 1 8/7/09 3:55 PM Page 353 On the Measurement of Zimbabwe’s Hyperinflation Steve H. Hanke and Alex K. F. Kwok Zimbabwe experienced the first hyperinflation of the 21st centu- ry.1 The government terminated the reporting of official inflation sta- tistics, however, prior to the final explosive months of Zimbabwe’s hyperinflation. We demonstrate that standard economic theory can be applied to overcome this apparent insurmountable data problem. In consequence, we are able to produce the only reliable record of the second highest inflation in world history. The Rogues’ Gallery Hyperinflations have never occurred when a commodity served as money or when paper money was convertible into a commodity. The curse of hyperinflation has only reared its ugly head when the supply of money had no natural constraints and was governed by a discre- tionary paper money standard. The first hyperinflation was recorded during the French Revolution, when the monthly inflation rate peaked at 143 percent in December 1795 (Bernholz 2003: 67). More than a century elapsed before another hyperinflation occurred. Not coincidentally, the inter- Cato Journal, Vol. 29, No. 2 (Spring/Summer 2009). Copyright © Cato Institute. All rights reserved. Steve H. Hanke is a Professor of Applied Economics at The Johns Hopkins University and a Senior Fellow at the Cato Institute. Alex K. F. Kwok is a Research Associate at the Institute for Applied Economics and the Study of Business Enterprise at The Johns Hopkins University. 1In this article, we adopt Phillip Cagan’s (1956) definition of hyperinflation: a price level increase of at least 50 percent per month. -
A Crash Course on the Euro Crisis∗
A crash course on the euro crisis∗ Markus K. Brunnermeier Ricardo Reis Princeton University LSE August 2019 Abstract The financial crises of the last twenty years brought new economic concepts into classroom discussions. This article introduces undergraduate students and teachers to seven of these models: (i) misallocation of capital inflows, (ii) modern and shadow banks, (iii) strategic complementarities and amplification, (iv) debt contracts and the distinction between solvency and liquidity, (v) the diabolic loop, (vi) regional flights to safety, and (vii) unconventional monetary policy. We apply each of them to provide a full account of the euro crisis of 2010-12. ∗Contact: [email protected] and [email protected]. We are grateful to Luis Garicano, Philip Lane, Sam Langfield, Marco Pagano, Tano Santos, David Thesmar, Stijn Van Nieuwerburgh, and Dimitri Vayanos for shaping our initial views on the crisis, to Kaman Lyu for excellent research assistance throughout, and to generations of students at Columbia, the LSE, and Princeton to whom we taught this material over the years, and who gave us comments on different drafts of slides and text. 1 Contents 1 Introduction3 2 Capital inflows and their allocation4 2.1 A model of misallocation..............................5 2.2 The seeds of the Euro crisis: the investment boom in Portugal........8 3 Channels of funding and the role of (shadow) banks 10 3.1 Modern and shadow banks............................ 11 3.2 The buildup towards the crisis: Spanish credit boom and the Cajas..... 13 4 The financial crash and systemic risk 16 4.1 Strategic complementarities, amplification, multiplicity, and pecuniary ex- ternalities...................................... -
“The Effects of Local Currency Absence to the Banking Market: the Case for Zimbabwe from 2008”
“The effects of local currency absence to the banking market: the case for Zimbabwe from 2008” AUTHORS Charles Nyoka Charles Nyoka (2015). The effects of local currency absence to the banking ARTICLE INFO market: the case for Zimbabwe from 2008. Banks and Bank Systems, 10(2), 15- 22 RELEASED ON Friday, 31 July 2015 JOURNAL "Banks and Bank Systems" FOUNDER LLC “Consulting Publishing Company “Business Perspectives” NUMBER OF REFERENCES NUMBER OF FIGURES NUMBER OF TABLES 0 0 0 © The author(s) 2021. This publication is an open access article. businessperspectives.org Banks and Bank Systems, Volume 10, Issue 2, 2015 Charles Nyoka (South Africa) The effects of local currency absence to the banking market: the case for Zimbabwe from 2008 Abstract Local currency based fee charges have always been one of the major contributors to bank profitability. A profitable banking market has more chances of stability compared to less profitable banking markets. The developments within the Zimbabwean on economy over the last six years merit more attention by researchers than has been given to it over the same period. Zimbabwe adopted a multicurrency approach to banking since the establishment of a government of national unity in 2008. To date the country has remained without a domestic currency a factor that seems to have con- tributed to the demise of some banks in Zimbabwe. Numerous press reports have indicated that Zimbabwean Banks are facing liquidity problems a factor that has culminated in the closer of and the surrendering of bank licences to authori- ties by at least nine banks to date. -
Hans-Joachim Voth* 23.1.2001 JEL Classification Codes E31, E43, E44
WITH A BANG, NOT A WHIMPER: PRICKING GERMANY’S ‘STOCK MARKET BUBBLE’ IN 1927 AND THE SLIDE INTO DEPRESSION Hans-Joachim Voth* 23.1.2001 ABSTRACT In May 1927, the German central bank intervened indirectly to reduce lending to equity investors. The crash that followed ended the only stock market boom during Germany’s relative stabilization 1924-28. This paper examines the factors that lead to the intervention as well as its consequences. We argue that genuine concern about the ‘exuberant’ level of the stock market, in addition to worries about an inflow of foreign funds, tipped the scales in favour of intervention. The evidence strongly suggests that the German central bank under Hjalmar Schacht was wrong to be concerned about stockprices – there was no bubble. Also, the Reichsbank was mistaken in its belief that a fall in the market would reduce the importance of short- term foreign borrowing, and help to ease conditions in the money market. The misguided intervention had important real effects. Investment suffered, helping to tip Germany into depression. JEL classification codes E31, E43, E44, N14, N24 Keywords Stock Market, Foreign Lending, Fixed Exchange Rates, Asset Prices, Bubbles, Germany, Monetary Policy. * Economics Department, Universitat Pompeu Fabra, 08005 Barcelona, Spain and Centre for History and Economics, Cambridge CB2 1ST, UK. Email: [email protected]. 2 During November and December 1928, the American economist James W. Angell was conducting fieldwork for his book on the German economy. Visiting more than fifty factories and mines in the process, he came away deeply impressed by the prosperity and dynamism he encountered: “[O]nly six years after her utter collapse, Germany is once again one of the great industrial nations…and she is rapidly increasing her power. -
JP Morgan and the Money Trust
FEDERAL RESERVE BANK OF ST. LOUIS ECONOMIC EDUCATION The Panic of 1907: J.P. Morgan and the Money Trust Lesson Author Mary Fuchs Standards and Benchmarks (see page 47) Lesson Description The Panic of 1907 was a financial crisis set off by a series of bad banking decisions and a frenzy of withdrawals caused by public distrust of the banking system. J.P. Morgan, along with other wealthy Wall Street bankers, loaned their own funds to save the coun- try from a severe financial crisis. But what happens when a single man, or small group of men, have the power to control the finances of a country? In this lesson, students will learn about the Panic of 1907 and the measures Morgan used to finance and save the major banks and trust companies. Students will also practice close reading to analyze texts from the Pujo hearings, newspapers, and reactionary articles to develop an evidence- based argument about whether or not a money trust—a Morgan-led cartel—existed. Grade Level 10-12 Concepts Bank run Bank panic Cartel Central bank Liquidity Money trust Monopoly Sherman Antitrust Act Trust ©2015, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes, provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education. 1 Lesson Plan The Panic of 1907: J.P. Morgan and the Money Trust Time Required 100-120 minutes Compelling Question What did J.P. Morgan have to do with the founding of the Federal Reserve? Objectives Students will • define bank run, bank panic, monopoly, central bank, cartel, and liquidity; • explain the Panic of 1907 and the events leading up to the panic; • analyze the Sherman Antitrust Act; • explain how monopolies worked in the early 20th-century banking industry; • develop an evidence-based argument about whether or not a money trust—a Morgan-led cartel—existed • explain how J.P. -
The Rising Thunder El Nino and Stock Markets
THE RISING THUNDER EL NINO AND STOCK MARKETS: By Tristan Caswell A Project Presented to The Faculty of Humboldt State University In Partial Fulfillment of the Requirements for the Degree Master of Business Administration Committee Membership Dr. Michelle Lane, Ph.D, Committee Chair Dr. Carol Telesky, Ph.D Committee Member Dr. David Sleeth-Kepler, Ph.D Graduate Coordinator July 2015 Abstract THE RISING THUNDER EL NINO AND STOCK MARKETS: Tristan Caswell Every year, new theories are generated that seek to describe changes in the pricing of equities on the stock market and changes in economic conditions worldwide. There are currently theories that address the market value of stocks in relation to the underlying performance of their financial assets, known as bottom up investing, or value investing. There are also theories that intend to link the performance of stocks to economic factors such as changes in Gross Domestic Product, changes in imports and exports, and changes in Consumer price index as well as other factors, known as top down investing. Much of the current thinking explains much of the current movements in financial markets and economies worldwide but no theory exists that explains all of the movements in financial markets. This paper intends to propose the postulation that some of the unexplained movements in financial markets may be perpetuated by a consistently occurring weather phenomenon, known as El Nino. This paper intends to provide a literature review, documenting currently known trends of the occurrence of El Nino coinciding with the occurrence of a disturbance in the worldwide financial markets and economies, as well as to conduct a statistical analysis to explore whether there are any statistical relationships between the occurrence of El Nino and the occurrence of a disturbance in the worldwide financial markets and economies. -
Blockchain and Cryptocurrency in Africa a Comparative Summary of the Reception and Regulation of Blockchain and Cryptocurrency in Africa
Blockchain and Cryptocurrency in Africa A comparative summary of the reception and regulation of Blockchain and Cryptocurrency in Africa 2018 Baker McKenzie, Johannesburg IMPORTANT DISCLAIMER: The material in this report is of the nature of general comment only. It is not offered as legal advice on any specific issue or matter and should not be taken as such. Readers should refrain from acting on the basis of any discussion contained in this report without obtaining specific legal advice on the particular facts and circumstances at issue. While the authors have made every effort to provide accurate and up-to-date information on laws and policy, these matters are continuously subject to change. Furthermore, the application of these laws depends on the particular facts and circumstances of each situation, and therefore readers should consult their lawyer before taking any action. Information contained herein is as at November 2018. CONTENTS PREFACE ............................................................................................................................................1 GEOGRAPHICAL OVERVIEW ....................................................................................................... 2 COUNTRY PROFILES ..................................................................................................................... 3 1. Botswana ................................................................................................................................................................... 3 2. Ghana .........................................................................................................................................................................4 -
Currency Wars, Recession Policies and the Overvalued Euro Are to Be Blamed for the Modern Greek Tragedy
International Journal in Economics and Business Administration Volume IV, Issue 1, 2016 pp. 3 - 19 Currency Wars, Recession Policies and the Overvalued Euro are to be Blamed for the Modern Greek Tragedy Theodore Katsanevas* Abstract: In this paper we argue that, Modern Greek Tragedy is mainly due to the overvalued euro in combination with the strict austerity policies imposed by Berlin. Greece also pays the price of the currency war between the dollar and the euro. The latter puts a heavy burden upon the country’s economic competitiveness as a costume that does not fit the Greek economy, which is mainly based on tourism that requires a labour-intensive production process. The deadlocks of strict monetary and income’s policies, accelerates the upcoming economic thunderstorm, the spiral of recession, the increase in unemployment, the brutal reduction of wages and pensions, the further fall of GDP and the increase of the debt. The always renewed fatal economic forecasts, simply postpone the explosion of the deadlock. Basic economics in theory and in practice are being depreciated. One wonders if there are economists, neoliberals, not to mention, Keynesians and/or radicals that, may support the possibility of an economic recovery under deep recession policies and the existence of a hard currency such as the euro. Trapped under the Berlin’s political prison and the euro zone fetish, Greece continues to follow its tragic road on the grounds that there is no alternative. Yet, in democracies there are no dead ends. If an economic policy is proven to be wrong and catastrophic, the best alternative is to change it. -
Currency Considerations in the Zimbabwean Context 2018
PUBLIC ACCOUNTANTS AND AUDITORS BOARD Currency considerations in the Zimbabwean context 26 February 2018 1 1. BACKGROUND 1.1. Zimbabwe witnessed significant monetary and exchange control policy changes in 2016 through to 2017. The changes were a result of continued economic challenges faced by the country that resulted in the liquidity crisis. In response, the RBZ promulgated a series of exchange control operational guidelines and compliance frameworks to alleviate the cash shortage and boost the economy. 1.2. The accountancy profession accepted the positive impact of these measures on entities but also noted some concerns that arose from this policy implementation on the financial reporting of entities in Zimbabwe, hence, this document. 1.3. The aim of this paper is to: I. lay out the functional currency considerations that preparers and auditors are having to make before year end reporting commences; II. outline the relevant International Financial Reporting Standards (IFRS) implications; and III. offer recommended guidance to preparers of financial statements with the intention of achieving fair and consistent presentation to the benefit of the users. 2. FUNCTIONAL CURRENCY CONSIDERATIONS 2.1. In 2009, Zimbabwe adopted the multi-currency system upon the abandonment of the Zimbabwean dollar (ZW$). For financial reporting purposes (presentation of the national budget and levying of taxes etc.) the government of Zimbabwe adopted the United States Dollars (“USD”) as the functional and reporting currency. Consequently, business also adopted the USD as the functional and reporting currency. 2.2. From the fourth quarter of 2015, there have been notable changes in the availability of foreign currency. This has resulted in a need to assess whether there has been a change in the functional currency.