ABSTRACT
Chapter 7 provides an analytical narrative of the wave of inflation and hyperinflation in transitional economies in the 1980s. Seeds of rising inflation and hyperinflation were already planted in the very structure of the central planning system of these countries, including a form of repressed inflation. In Russia and the surrounding areas, poor handling of the Ruble Zone was the main culprit for the wave of hyperinflation that struck all of the USSR successor countries. In Yugoslavia – the smaller entity left after the breakup of the Socialist Federal Republic of Yugoslavia in 1991 – the hijacking of certain policies ignited the flame of inflation, which was further fueled by the de facto dollarization that was already pervasive in the country. The specter of inflation haunted every transitional economy in this region in this era. After bouts of high inflation, China and Vietnam in East Asia managed to escape from it, largely by quickly joining the new tide of globalization that began to bloom in the 1990s.
