Abstract

This paper provides a description of the Hungarian hyper-inflation in the period
immediately after World War II. It is shown that the inflationary process started with the
necessity of financing the high costs of the war effort. After the war, the reduction of production
capacity, reparation payments, and the large government deficit provided the factors for
the rapid growth of the rate of inflation. Reference is made to the unsuccessful effort to introduce
an indexed currency. The stabilization process is seen as a result of careful planning
and a very harsh redistribution of income among the various social classes.

JEL Classification: E31; N14.