Introduction

This chapter gives a brief illustration of the basic concepts of hyperinflation, starting with definitions of hyperinflation and price measurement. On “what causes hyperinflation?” concepts of shortages, balance of payment deficit, government budget deficit, expansionary monetary policy, and paper currency system are briefly discussed. It stresses the importance of inflation expectations. On “what are the impacts of hyperinflation?” analysis goes on expectations, access to credit, access to foreign exchange, and the role of indexation. All important elements of stabilization program are highlighted, from currency reform to structural reform.