Abstract

This paper provides a description of the Hungarian hyperinflation in the period immediately after Word 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 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 inco-me among the various social classes.