{"id":34381,"date":"2018-05-20T07:29:11","date_gmt":"2018-05-20T12:29:11","guid":{"rendered":"http:\/\/olduvai.ca\/?p=34381"},"modified":"2018-05-20T07:29:11","modified_gmt":"2018-05-20T12:29:11","slug":"venezuelas-episode-of-hyperinflation-reaches-new-highs-prices-double-every-17-5-days","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=34381","title":{"rendered":"Venezuela’s Episode of Hyperinflation Reaches New “Highs” – Prices Double Every 17.5 Days"},"content":{"rendered":"
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Venezuela’s Episode of Hyperinflation Reaches New “Highs” – Prices Double Every 17.5 Days<\/span><\/a><\/h3>\n<\/div>\n
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The most important price in an economy is the exchange rate between the local currency and the world\u2019s reserve currency \u2014 the U.S. dollar. As long as there is an active black-market (read: free market) for currency and the data are available, changes in the black-market exchange rate can be reliably transformed into accurate estimates of countrywide inflation rates\u2014if the annual inflation rates exceed 25%. The economic principle of\u00a0Purchasing Power Parity (PPP) allows for this transformation<\/a>.<\/p>\n

Using this principle, I compute implied annual inflation rates using high-frequency data and report them on a daily basis. For the countries that I monitor daily, the table below shows the annual rates for the eight countries with the highest inflation rates in the world.<\/p>\n

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At present, Venezuela is suffering from hyperinflation. It holds down the top spot on my list, with an annual inflation rate of 16,428%. Note that my measurement of the implied inflation rate is much higher than the widely reported International Monetary Fund\u2019s (IMF) end-of-year forecast of 12,870% (13,000% rounded). I measure; the\u00a0IMF foolishly forecasts<\/a>. A comparison of my measurements with the IMF\u2019s projections for the other seven countries\u2019 year-end annual inflation rates shows that the IMF’s projections are way off the mark. Indeed, my current measured inflation rates for \u201ctoday\u201d exceed those that the IMF projects, with the exception of South Sudan’s, by a wide margin. Given these large divergences and the IMF\u2019s poor record of forecasting inflation in countries experiencing elevated inflation rates, one wonders why the financial press reports the IMF forecasts, and why it does so with such reverence.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Venezuela’s Episode of Hyperinflation Reaches New “Highs” – Prices Double Every 17.5 Days The most important price in an economy is the exchange rate between the local currency and the world\u2019s reserve currency \u2014 the U.S. dollar. As long as there is an active black-market (read: free market) for currency and the data are available, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[413,13651,851,4318],"class_list":["post-34381","post","type-post","status-publish","format-standard","hentry","category-economics","tag-hyperinflation","tag-steve-h-hanke","tag-venezuela","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34381","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=34381"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34381\/revisions"}],"predecessor-version":[{"id":34382,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/34381\/revisions\/34382"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=34381"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=34381"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=34381"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}