The End of Sudan's Episode of Hyperinflation in 1990s

Scholars Journal of Economics, Business and Management e-ISSN
2348-5302 - http://saspjournals.com/sjebm
Elwaleed AT.; Sch J Econ Bus Manag, 2016; 3(5):244-251 p-ISSN 2348-8875
SAS Publishers (Scholars Academic and Scientific Publishers)
(An International Publisher for Academic and Scientific Resources)
The End of Sudans Episode of Hyperinflation in 1990s

Elwaleed Ahmed TALHA
Lecturer at Elrazi University Research Economist

Department of Economics and Finance Central Bank of Sudan
Khartoum Sudan Policy Research and Statestics Department
Email: elwaleed.ahmed@aol.com
1TU U1T Research Department
Mobile: +249(9)12327779
ABSTRACT
The main purpose of this paper is to examine whether Sudan's episode of hyperinflation was a
fiscal phenomenon or monetary phenomenon. Bulk of scholars point out that hyperinflation is a
monetary phenomenon and caused and derived by monetary situations. Yet, I argue that it is a fiscal
phenomenon resulted from huge budget deficit, which is financed by printing money and/or
borrowing from banking system. The aim of this short run analysis is to prop my argument that fiscal
policy plays an important role to end hyperinflation in Sudan. Also I try to examine the short-run
fluctuation in Sudan which happened during 1996 and 1997 as I would like to figure out what factor
influenced hyperinflation to decline from 164% in August 1996.It is worth mentioning that, I have
carried out some amendments on the data. For example, some variables are classified on the nominal
terms such as money supply, exchange rate, and price level, whereas others are classified as
non-nominal variables e.g. inflation.
Key words: Hyperinflation, Money Supply, Money Demand, Sudan
1- INTRODUCTION carries out a comprehensive reform and more

importantly an alternative source of finance
Since the early 1990s, Sudan had been
instead of money printing. Predominantly, it is
experiencing incessant and swilling rate of
assumed that unlike exchange rate, hyperinflation
hyperinflation until 1996. Some policymakers and
responds tardily to the shocks in the economy
economists have realized that this level of
weather they are positive or negative. In the sense
hyperinflation has an inordinate steam, and that
that people shape their expectation by looking at
either it is merely not susceptive to be treated by
past rates of inflation as well as the government`s
monetary or fiscal policy, unless the government
policies.
1
Scholars Journal of Economics, Business and Management e-ISSN 2348-5302 -
http://saspjournals.com/sjebm
This research depicts number of changes occurred twenty-three year period (1990-2013) the number
during the period of hyperinflation in Sudan by of observations is 277 by including Jan. 2014 in
putting more emphasis on the exact timing point of the series. The main source of data is the line
stopping hyperinflation in Sudan. Likewise, the ministries in Sudan such as Central Bank CBOS,
goal is to figure out what behind ending Ministry of Finance MOF, and Sudan Central
hyperinflation in Sudan and what fetched under Bureau of Statistics SCBS. Monetary data such as
control in 1990s. I shall portray and expound inflation rate, nominal exchange rate, money
evidences in Sudan associated with the period of supply are obtained from CBOS. Fiscal data,
hyperinflation. which includes government expenditure, tax
Sudan experienced hyperinflation since early revenue and government debt, are obtained from
1990s; it is attributed to the enormous budget MOF. And price level of bread is obtained from
deficit, which used to be financed through printing SCBS. Dates on empirical evidences obtained
money. And also referred to the high level of from The (Methodology of Economic Reforming
public debt created by the government. On the in Sudan) the textbook was authored by Dr.
other hand, the government had the upper hand on Abd-elwahab Osman, the Sudanese Finance`s
the economy and used to push the Central Bank to Minister in 2005. In terms of the nominal
use printing press and borrow from the Banking exchange rate, I obtained daily data from CBOS to
system to finance the deficit in the sense that it identify the exact timing point of the events and to
used to be dependent central Bank. The deficit was test whether it consistent with the end of
because of the civil war in south Sudan, 75% of hyperinflation.
government expenditure used to go to the defense I have carried out some amendments on the data.
and military issues. For example, some variables are classified on the
In 1996, hyperinflation stopped and started to fall nominal terms such as money supply, exchange
constantly until reached two digits in one year. rate, and price level, whereas others are classified
There were pre-implemented policies followed by as non-nominal variables such as inflation. Since
the government (monetary and fiscal policies). But inflation is the dependent variable, I show in my
the main factor contributed towards ending analysis changes in money supply, changes in
hyperinflation was oil production at early 1996, as exchange rate, and changes in prices to make them
all the pre-implemented policies followed the consistent with the dependent variable. Therefore,
announcement of oil production. [See section 3] I used the following equation
1-1 Methodology and Data Collection Nominal Exchange Rate..
The analysis is carried out using monthly time log
( ) log
(1 )
series data from Sudan (examined over a
2
Money Supply.. assumed that exchange rate causes inflation rate

log ( ) (1 ) either to increase or decrease. Unlike other
Money Supply.. log ( ) scholars, I assumed that exchange rate causes
(1 ) growth in money supply. Since I am carrying out
More importantly, because Sudan changed its short-run analysis, I assumed that price level is
currency several times as it is explained on the sticky. All these assumptions are being examined
following table, I was eager to adjust the data to be in [Section-3]
consistent with the current currency is now used I am interested in this topic because there are no
(Sudanese Pound) many studies carried out on the end of
[Table -1] Changes in the Sudanese Currency hyperinflation in Sudan. the previous studies like
During 1956 - 2014 (Marial, 2010) and (Mustafa, 2010) focused on the
The The period of Measure of the determinants of inflation in Sudan. And found out
currency use unit that inflation is a monetary phenomenon, while my
name research finds that hyperinflation is a fiscal
The first (Jan.1956-May phenomenon and is derived by fiscal situations in
Sudanese 1992) the country.
pound 2- Literature Views
Sudanese (June 1992 1dinnar=10 pound. There is a dispute among scholars whether
Dinar May 2007) hyperinflation is a monetary phenomenon or a
New (June2007 until 1pound=100dinar= fiscal phenomenon. Pierre (2000) addresses that
Sudanese now) 1000 old pound. monetary and fiscal factors almost exclusively
pound cause hyperinflation. Nonetheless, the vast
Source Central Bank of Sudan (CBOS) majority of economists are principally in
1-2 Objectives agreement with the view that inflation is
As stated above, the main goal of this research is to fundamentally a monetary phenomenon.( Pierre L.
figure out what ended hyperinflation in Sudan by Siklos,2000).Culiuc and Walton (2002)agree
using (Timing Method). And also to confirm that withPierre L. Siklos(2000) that inflation is
fiscal policy was behind ending hyperinflation in monetary phenomena, but they Culiuc and Walton
Sudan. The aim also is to support my assumptions (2002) added that it is closely linked to fiscal
arguments empirically. I argue that not only rendering, and this is in turn linked to both
money supply, but also money demand had a key economic institutions and to the management of
role in ending hyperinflation in Sudan.
Furthermore, I set up the following assumptions, I
3
underlying distributional disputes (Culiuc and My aim in this paper is extended to figure-out
Walton, 2002). what causes money supply to fall? And what
Unlike most of scholars who argue that causes money demand to rise during the period of
hyperinflation is monetary phenomena, Fernando hyperinflation? Given the demand of money,
de Holanda Barbosa. (2005) comes up with a reduction in the money supply led inflation to go
different notion when he addressed that down. Given the money supply, a raise in money
hyperinflation is fiscal phenomena and said the demand led inflation to go down .I assume that
main source of hyperinflation is the fiscal crisis. exchange rate causes money growth since there is
Actually, he paraphrasedFriedman`s argument some evident supporting this assumption and also
[(1970), p.25] which stated that hyperinflation is assume that exchange rate causes inflation
always and everywhere a fiscal phenomenon, in dynamic. In ether one, I assume that exchange rate
the sense that a hyperinflation caused by a bubble comes first.
has not been observed. ( Fernando de Holanda Since the exact timing point of stopping
Barbosa. 2005).The fiscal structure of the hyperinflation is being identified (August 1996) , I
economy is the key determinant of the attempt to test the positive shocks related to money
macroeconomic equilibrium and therefore of the market during this period such as currency peg,
effect of monetary policy. The failure to take fiscal money supply, and some announcements affected
effects into account could cause a people decision in terms of how much money must
misinterpretation of the expansionary and be held.
distortive character of monetary policy in the Since oil production in 1996, economic situation
1960s and1970s. Martin Feldstein (1982). deteriorated significantly, GDP per capita grows
Michael K. Salemi (2010) addressed that by 2.5%, budget deficit eliminated because of oil
hyperinflations are caused by extremely rapid production and economic reforming programs
growth in the supply of "paper" money. They carried out by the government in 1997. More
occur when the monetary and fiscal authorities of a importantly, peoples expectation shifted swiftly
nation regularly issue large quantities of money to to the optimistic expectation especially when the
pay for a large stream of government expenditures. government perceived that oil production comes
In effect, inflation is a form of taxation where the true. Ever since the government began to
government gains at the expense of those who hold implement series steps to stimulate the economy.
money whose value is declining. Hyperinflations These programs comprise both monetary and
are, therefore, very large taxation schemes. fiscal aspects by putting more emphasis on the
(Michael K. Salemi, 2010). fiscal side for short-run and long-run. In this part, I
3- The Empirical Part am taking into account the motives behind money
4
demand, and try to examine peoples decision During 1996 and 1997, there were number of
(household &firms) people` demand of money, positive shocks related to Macroeconomics policy.
Peoples reaction for oil production and Central These policies had tremendous impact towards
Bank policies in terms of exchange rate, money ending hyperinflation whereas fiscal policy had
supply, and inflation and the overall effect on the upper hand. Regarding the monetary policy,
prices. On the top of that I display some evidences Bank of Sudan (BOS) announced pegging the
from Sudan foster that money demand played a currency on 18th March 1996 and as exchange rate
key role to stop hyperinflation. responds immediately to news and rumors being
Vast majority of scholars tend to focus on released, the official rate depreciated significantly
money supply as a key determinant of creating in anticipation that during the peg period exchange
hyperinflation and stop it and dismiss the function rate will be fixed at certain level, at the same time
of money demand, which is also as important as growth of money supply increased from 0.1% in
money supply and contributes significantly to stop February 1996 until 10% in April 1996 in the
hyperinflation.[Figure-3] shows that in July 1990 sense that there is a positive relationship between
inflation recorded 44%. In August 1990 there was growth in money supply and growth in exchange
crazy jump in inflation rate was 90%. Due to huge rate. [Figure-2]
budget deficit in early 1990s because of civil war
in south Sudan and high level of public debt, Figure.1: Price level and Nominal Exchange
which was created by the government? The Rate
government used to finance the deficit through During Jan. 1990 - Jan. 2014
printing money and borrowing from banking 200
system. That was mainly attributed to the fact that 150
the government had the upper hand and forced

100
central bank (dependent) to print money and
50
borrow from banking system. So the high level of
public debt was associated with the high level of 0
inflation during the first half of 1990s.In August -50

90 92 94 96 98 00 02 04 06 08 10 12
1996, hyperinflation hit the peak of 164% then Changes in Exchange rate
Changes in prices
started to decline continuously until reached one
digit 8% in December 1998 (during two years and Source: Data Base of Central Bank of Sudan
4 months). According to the definition of (CBOS)
hyperinflation, it was ended in only 9 months. [Figure-1] shows that between Jan. 1990 and
March 1998 the Sudanese pound depreciated
5
200
swiftly and domestic prices rose rapidly. Also, it is
observed that during the period of the 150
hyperinflation, the fluctuations in domestic prices 100
and nominal exchange rate are very high, compare 50
to the period after hyperinflation, changes in

0
nominal exchange rate remains stable because of

-50
the huge capital inflow in 1999 from oil exports. 90 92 94 96 98 00 02 04 06 08 10 12
On the other hand, changes in domestic prices Changes in Exchange rate

changes in MS
become relatively stable after 1997 Source: Data Base of Central Bank of Sudan
In June 1996, Bank of Sudan (BOS) formally (CBOS)
pegged the Sudanese pound against dollar; this Because Central Bank has to do its best to
peg led to huge appreciation in the currency and keep exchange rate constant at its pegged level,
made it stronger and more expensive than before, BOS adjusted money supply at the level of 2.5%
consequently, money growth declined from 8% in during the peg period. If Central Bank is unable to
July 1996 to 0% in August 1996. [See Figure 2] As take over this issue by adjusting money supply,
it can be observed, there is a huge fluctuation in people would prefer to enter the black market
nominal exchange rate and money supply during where the currency is traded at the parallel market
the period of hyperinflation (1991 1996). rate ignoring Central Bank peg.
However, both of them remain consistent after On 16th June 1997, CBOS decided to follow
1996. Exchange rate remains at the level of 3% managed floating regime instead in consideration
while money supply had been adjusted in the range that such a regime is suitable for foreign capital
of 2% and 0%. inflow. Basically, since the announcement was
In contrast, during hyperinflation period being released, exchange rate depreciated
exchange rate used to fluctuate between 179% and considerably again from 1.4 SP/$ in May 1997
22% in February 1992 and May 1996 respectively. until 2.6 pound/$ in May 1999 during this period
[See Figure-2] changes in nominal exchange rate fluctuated
because BOS did not intervene to control the
Figure.2: Money Growth and Changes in exchange rate and leave it to the market
Nominal Exchange Rate mechanism while during the peg period BOS
During Jan. 1990 Jan. 2014 (%) intervened as a seller to keep it at the level of peg
or close to. Since September 1999 and due to huge
capital inflow of oil exports, exchange rate
remains consistent at 2.6 pound/dollar.
6
[Figure-3] shows that due to the positive dollar, this peg led to huge appreciation in the
dynamic relation between money growth and currency and made it stronger, and the
exchange rate, inflation rate declined continuously appreciation of the pound is followed by the
from 164% in August 1996 to 32%in August 1997 decline in money growth by around 8% during the
to 13% in August 1998. The decline in inflation period from July 1996 - August 1996.As soon as
happened two months after pegging the currency, the pound was pegged, market dealers responded
while money supply was adjusted one month after immediately to the news, the demand of the
pegging the currency and one month before domestic currency declined and consequently
inflation declines which seems logical. (The Bank of Sudan BOS adjusted the growth of money
currency was pegged in June 1996, growth in supply, thus inflation declined. In this sense, there
money supply was adjusted in July 1996, and then are two stories related to the money demand as
inflation rate started to decline from August 1996) following:
this support my argument that exchange rate 4- The First Story: Announcements Period
causes money supply to be adjusted but the (March 1996 June 1996)
question remains. How these casual relationships
During this period, the government of Sudan
occur?
released two announcements. Fisrt, the
announcement of oil production, and second the
Figure.3 Inflation and Changes in Nominal
announcement of the currency peg. Due to these
Exchange Rate
announcements, People rushed to the central bank
During (Jan. 1990 - Jan. 2014)
200
to buy dollars in anticipation that the currency will
be pegged at higher level so that they can gain the
150
margin between buying and selling rate. So people
100 did not have incentive to hold domestic currency
50
so during this period there was a decline in money
demand. In March 1996, there was agreement
0
signed between Chinese and Sudanese
-50 government to build pipeline for exporting oil.
90 92 94 96 98 00 02 04 06 08 10 12
Changes in Exchange rate INF

Actually, this announcement did not affect the
demand for money as much as what the
Source: Data Base of Central Bank of Sudan
announcement of peg did. But it gave an indication
(CBOS)
for the future and changed government`s and
On June 10th 1996, Bank of Sudan (BOS)
people expectation.
formally pegged the Sudanese pound against
7
Money demand is also affected by fiscal of oil production and led to a huge budget deficit
performance. People have less incentive to hold especially in 2011.
money when the government uses printing money The government of Sudan attempted to set up
to finance its budget. This is what addressed by a balanced budget by following tightening fiscal
Fernando (2005) under rational expectation theory. policy, it succeeded to some extend to eliminate
The logic behind is that people fully know in the deficit. The stabilization of the pound was
advance that the economy will be broken down associated by a proportional augmentation in the
since the fiscal crisis is not tenable. In this case, total liabilities of the central bank. However, the
people optimally choose to hold small amount of deliberate adjustment in the fiscal policy regime
money. that caused the stabilization also ended
hyperinflation in Sudan.
Figure.4: Government Deficit

During 1990-1996 (SDG Millions) 5- Currency Peg period (June 1996 May
Deficit/Surplus
3
1997)
2
1 The interaction of money demand in this

0 period had an effect on stopping hyperinflation. In
-1
-2
June 1996 Sudanese pound appreciated by 13%
-3 change against US dollar this is attributed to the
-4
increase in the price level as dollar was cheaper
-5
-6
and buy fewer pounds. And also attributed to the
90 92 94 96 98 00 02 04 06 08 10 12
expansionary fiscal policy followed by the
government.
Source: Data Base of Ministry of Finance (MOF)
In1997, the government followed
As it can be seen from Figure-4, there was a
expansionary fiscal policy by increasing
budget deficit between 1992 and 1996, since the
government expenditure and reducing taxes.
deficit had gradually been eliminated until 2008
Income tax decreased by 5% in 1996. Capital Tax
because of oil revenue, which used to contribute
also decreased from40% in 1996 to 35% and 30%
by 85% of the total revenue, then the deficit comes
in 1997/1998 and 1999/2000 respectively. On 15th
up again from 2008. Due to the separation between
April 1997 the announcement of VAT was
North and South Sudan, Sudan, lost the advantage
released and approved in Dec. 1999 and formally
8
became official tax in June 2000. Here I can argue interest rate together determine people demand of
that Taxation reform comes after the money by taking into account other factors such as
announcement of oil production and peg. risks associated to each one and the exchange rate
In terms of monetary policy, during the regime followed. Also, it depends on the country
period of the currency peg, demand for money economic situation. For example, in a developing
increased by selling the amount of dollars they country like Sudan, exchange rate is the main
have especially when Bank of Sudan started to determinant of money demand. Interest rate also
decrease money supply to be able keep the determines but not as accurate as exchange rate
exchange rate at its announced level. But since does. On the other hand, in developed countries,
May 1997, there was huge depreciation in because there is no black market and inflation rate
exchange rate, which was attributed to the is low compare to other countries, at almost
announcement of the government to stimulate the interest rate is more likely determines people
economy by using economics reform packages demand for money.
which included taxation reform focusing on tax Mankiew (2009) pointed out that (there is a
administration. positive relationship between inflation and
[Figure.5] Changes in Price level and Inflation exchange rate, Countries with higher inflation rate
Rate tend to have currency depreciation).This argument
During Jan. 1990 - Jan. 2014 (%) matches with what I observed from the data.
200
During the period from 1990 to 1996 when
160
inflation is high, there was huge depreciation in
120
80
the exchange rate. But the question remains, what
40
the casual relationship between both variables?
0 Does inflation cause exchange rate to appreciate or
-40 depreciate? Or does exchange rate cause inflation
-80
90 92 94 96 98 00 02 04 06 08 10 12
to increase or decrease?
Changes in prices INF From the data I found that Stop of
Source: Data Base of Central Bank of Sudan Depreciation happened earlier than the decline in
(CBOS) and Central Bureau of Statistics (CBS) Inflation, which means exchange rate causes
The question remains, how can we determine inflation the logic behind.
people demand of money? More precisely how 6- Policy Implication
exchange rate determines people demand of
Economic theory tells us there is a positive
money? According to what mentioned above, in
relationship between money supply and nominal
this case I would say that exchange rate and
9
interest rate. For example, if Central Bank take over these issues, people would prefer to enter
increased money supply, supply curve shifts to the the black market where the currency is traded at
right and causes interest rate to decline. The the black market rate ignoring Central Bank peg.
decline in money supply increases nominal Mankiw (2009) points out that the interest
interest rate for any given level of output. rate determines the amount of money people want
Therefore, LM curve shifts to the left. to hold as the opportunity cost. However, I argue
As stated on Mankiw (2009) and according to that not only interest rate, but also exchange rate
Fisher effect`s assumption, in the long run, the fluctuations determines people demand for money
decline in growth of money supply decreases and thus money supply. Therefore, I assumed that
inflation and makes exchange rate to appreciate. both interest rate and exchange rate are the
This lowers the nominal interest rate in the long opportunity costs of each others , which means
run because price level is assumed to be flexible. people orient towards where the higher return
In contrast, according to the theory of liquidity exists but they also take into account risks
preference, when prices are sticky tighten associated to exchange rate fluctuations and
monetary policy would lead real money balances interest rate movements. In the case of Sudan,
to fall and interest rates to increase and then exchange rate was considered as a safe asset and
appreciation in the exchange rate. the risk associated was relatively lower during
Both arguments are consistent with the hyperinflation period than the interest rate risks
empirical evidence of Sudan in 1996 and during because of the oil productions and Bank of Sudan
1996 2013. In the second half of 1996s when policies towards the Foreign exchange Market in
Sudan economy witnessed the quickest decline of 1996.
hyperinflation in the recent history from 164% in Theoretically, IS-LM model analyses the
August 1996 to 13% in Dec. 1997 as a result economy in the short run when prices are sticky.
exchange rate remains stable at 1.4 But practically, this relation might hold in certain
SP/US$ through August 1996 to May 1997, then it situations. The most interesting thing in this
depreciated to 2.5 SP/$ because of changing in the short-run dynamic is that the demand for domestic
regime from fixed peg to the managed floating currency was coincide with the announcement of
regime. [Figures- 3 & 5]. Because Central Bank the currency peg on18th March 1996.
has to do its best to keep exchange rate constant, 7- Summary and Conclusion:
BOS adjusted money supply in one month at the
To sum up, Macroeconomics policy had
level of 2.5% during the peg period[Figure-2].And
reduced hyperinflation in 1996 and 1997 but the
also must have enough foreign reserve to meet
hidden fact behind these successful policy was oil
market mechanism. If Central Bank is unable to
10
production in the first half of 1996. So I can say credibility and black market would trade exchange
that oil production changed policymakers thinking rate at higher level so that people instead would
and decision from one hand and people sell dollars to the dealers in the black market then
expectation from the other hand. Likewise, it is oil the situation would definitely get worth. In case of
production, which stopped hyperinflation in 1996 managed floating, I agree that money supply has
by contributing to the revenue side of the budget effect on exchange rate because Central Bank does
and helped monetary policy makers to draw an not intervene in the Forex. market. If For example,
accurate policy to stop hyperinflation. More Central Bank increased money supply by 3%, then
importantly, although money supply played a key inflation rate will increase, and exchange rate
role to ending hyperinflation in Sudan, money would depreciate by 2.5%.
demand also played an important role to end Empirically, I found that exchange rate
hyperinflation and helped policymakers to draw causes inflation to decline. In case of Sudan,
their expectations accurately. exchange rate appreciation caused money growth
Fiscal policy had the upper hand to end to decline, and then inflation to go down. Bank of
hyperinflation in Sudan. During hyperinflation Sudan pegged the currency in June 1996 then the
period, budget deficit used to be financed by change in exchange rate appreciated by 13%
printing money and borrowing from banking between June 1996 and August 1996 after that
sector. These two factors created hyperinflation money supply was adjusted from 8% in July 1996
beside the high level of public debt, which was to 0% in September 1996, consequently,
created by the government. But since mid and late hyperinflation started to decline continuously from
1990s, budget deficit had been financed 164% in August 1996 to 13 in May 1997.
automatically through oil revenue. The
government took this advantage to reduce the level 8- REFERENCE
of public debt and carry out fiscal discipline. I. Culiuc Alexander and Michael Walton
Many scholars argue that money growth (2010), High and Hyperinflation
causes exchange rate to fluctuate like Jay (2011). Determinants and Solutions,
According to the analysis, I argue that it depends http://www.michaelwalton.info/wpcontent/up
on the exchange rate regime is adapted. In the case loads/pdf2010/11/Highand
of currency peg, exchange rate causes money II. Dr. Abd-elwahab Osman (2010), The
growth to be adjusted by the government Methodology of Structural Adjustment
otherwise, central bank would loss controlling the Programs in Sudan, Ministry of Finance and
exchange rate and fail keep it at the announced National Economy.
level. If this happened, Central Bank may loss the
11
III. Fernando de Holanda Barbosa, Alexander

Barros da Cunha, andSelviaMurebSallum
2005, Competitive Equilibrium
Hyperinflation under Rational Expectations,
No 578 , ISSN 0104-8910, Janeiro de 2005.
IV. Michael K. Salemi (2010), Hyperinflation, an
economics professor at the University of
North Carolina in Chapel Hill,
http://www.econlib.org/library/Enc1/Hyperin
flation.html#abouttheauthor .
V. N. GREGORY MANKIW, Macroeconomics,
8th Edition, Harvard University, Worth
Publishers, 41 Madison Avenue, New York,
NY 10010, www.worthpublishers.com , 2012
VI. Pierre L. Siklos, (2000), The End of the
Hungarian Hyperinflation of 1945-1946,
Journal of Momney, Credit and Banking,
Volume 21, Issue 2 (May, 1989),Ohio State
University Press, PP 25 - 27.
12

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Scholars Journal of Economics, Business and Management e-ISSN

The End of Sudans Episode of Hyperinflation in 1990s

Lecturer at Elrazi University Research Economist

Key words: Hyperinflation, Money Supply, Money Demand, Sudan

1- INTRODUCTION carries out a comprehensive reform and more

Money Supply.. assumed that exchange rate causes inflation rate

system. That was mainly attributed to the fact that 150

the government had the upper hand and forced

inflation during the first half of 1990s.In August -50

hyperinflation, the fluctuations in domestic prices 100

and nominal exchange rate are very high, compare 50

to the period after hyperinflation, changes in

nominal exchange rate remains stable because of

On the other hand, changes in domestic prices Changes in Exchange rate

Changes in Exchange rate INF

Figure.4: Government Deficit

1 The interaction of money demand in this

III. Fernando de Holanda Barbosa, Alexander

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