Author(s) :

Sanjana Shekar.

Volume/Issue :

Abstract :

In order to maintain economic stability, economies and central banks aim for an inflation rate of 2-3%. This is to avoid a hyperinflation crisis, which is defined as an annual inflation rate exceeding 50%. Understanding how and why inflation transmutes into hyperinflation has proved to be vital for public economic and monetary policy. Through detailed case studies of Brazil’s and Israel’s hyperinflationary experiences in the 1980s, economic principles and analysis are employed. It also uses detailed comparison to better understand the causes and consequences of hyperinflation and to study the effectiveness of different stabilisation approaches. The analysis reveals that while both countries were in similar situations, Israel achieved faster stabilisation due to stronger government credibility and beneficial external factors, whereas Brazil’s recovery was held up by multiple failed attempts and deeper economic turmoil. The findings show that successful stabilisation requires addressing root causes rather than implementing temporary solutions, maintaining public trust, and developing comprehensive long-term strategies. This research contributes to economic understanding by highlighting the importance of approaching hyperinflationary episodes through solutions based on specific country contexts. This analysis suggests that effective stabilisation strategies must consider both domestic economic conditions and external factors while prioritising the restoration of public confidence.