Monday, October 12, 2015

Pegged interest rates = hyperinflation?

Another data point for pegged interest rates leading to the hyperinflation solution from Brad DeLong. I didn't know that Weimar Germany had pegged interest rates.





3 comments:

  1. Mark Sadowski posted in the comments (somewhere) a table showing this one time. If I recall correctly after hyperinflation was well underway, there was a comical partial raising of the rates for a brief period: comical because it was relatively so small compared to how far out of control inflation was at that point. It's not apparent in your plot here, so perhaps that was a very brief transition period before raising rates more substantially.

    ReplyDelete
    Replies
    1. Hi Tom,

      I think it depends on the particular rate. This is an 'official rate', but some other rate might be relevant.

      Delete
    2. Here's Mark's table:

      http://noahpinionblog.blogspot.com/2014/04/the-neo-fisherite-rebellion.html?showComment=1398472777773#c1954688344009492559

      I love how they raised the rate 0.1% (all the way up to 5.1%) once YoY inflation had reached 603.5%

      Delete

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