Since 1947, hyperinflations in market economies have been rare. More common have been longer inflationary processes at rates above 100 percent per annum. This paper examines the main characteristics of such very high inflation episodes. We find that (i) almost 20 percent of countries have experienced such episodes; (ii) higher inflation is more unstable; (iii) in high-inflation countries, the relationship between the fiscal balance and seigniorage is strong; (iv) inflation inertia decreases as average inflation rises; (v) high inflation is associated with poor macroeconomic performance; and (vi) stabilizations that rely on the exchange rate as the nominal anchor are expansionary.

Since 1947, hyperinflations (by Cagan’s definition) in market economies have been rare. Much more common have been longer inflationary processes with inflation rates above 100 percent per annum. Based on a sample of 133 countries, and using the 100 percent threshold as the basis for a definition of very high inflation episodes, this paper examines the main characteristics of such inflations. Among other things, we find that (i) close to 20 percent of countries have experienced inflation above 100 percent per annum; (ii) higher inflation tends to be more unstable; (iii) in high-inflation countries, the relationship between the fiscal balance and seigniorage is strong both in the short and longrun’s; (iv) inflation inertia decreases as average inflation rises; (v) high-inflation is associated with poor macroeconomic performance; and (vi) stabilizations from high inflation that rely on the exchange rate as the nominal anchor are expansionary.

There is growing recognition that prolonged U.S. monetary policy easing has extraterritorial spillovers, driving up financial system leverage elsewhere in the world. Faced with financial stability threats that are not of their own making, what can these countries do? Specifically, is there a role for macroprudential tools, capital controls or foreign exchange intervention in safeguarding financial stability from risks arising externally? We examine the efficacy of these policy interventions by exploring whether preventative or reactive policy interventions can mitigate such risks. Using a sample of 950 bank and nonbank financial firms across 28 non-U.S. economies over the past two decades, we show that if policymakers are able to implement policies prior to an additional consecutive decline in U.S. interest rates, financial institutions do not increase their leverage by as much as they otherwise would. By contrast, it is more difficult to counter the spillovers with reactive policy interventions.