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29 Cato J. 353 (2009)
On the Measurement of Zimbabwe's Hyperinflation

handle is hein.journals/catoj29 and id is 357 raw text is: 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.' 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 0 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. 'In this article, we adopt Phillip Cagan's (1956) definition of hyperinflation: a price level increase of at least 50 percent per month. 353

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