From hyperinflation to the “currency miracle”: The Hungarian case, 1945-1946

Résumé 0

Between August 1945 and July 1946, Hungarians experienced the worst inflation crisis ever recorded. In the last moments of the episode, prices rose by 150,000% per day. These events produced a vast literature, whether at the time of the crisis with the articles of Kaldor and Nogaro, or later with the works of Cagan, Sargent and Wallace. However, the monetarist approach failed to provide a satisfactory explanation of this case, either in the modelling of behaviours during the price spike, or in the explanation of the end of the crisis. We return to this episode to emphasize in a first part the very specific policy of currency indexation that established a bi-monetary regime. Secondly, the stabilization strategy and its distributive effects are considered: taking these factors into account helps us to elucidate the virulence of the Hungarian crisis.