Political Environment、Hyperinnation And Currency Reform

The history of monetary policy is always accompanied by crises and reforms. To investigate the cause of inflation scholars have pay much attention to this puzzle for a long time. Based on the theory of different schools a variety of explanations were given. As an extreme case of inflation, hyperinflation will bring a country’s economic devastation. Thus the government takes extreme measures-currency reform to solve this issue. It is regrettable that the research of currency reform or monetary reform which aims to end hyperinflation. This article hopes to make this attempt.This article will focus on researching the reforms of33high inflation since the20th century. Specifically we wonder if political environment and other institutional factors affect the success or failure of the currency reform and we are trying to discuss how these factors affect the success or failure of the currency reform.Based on the data from CNTS Polity IV and so on, empirical analysis shows that during hyperinflation, the most important factor affecting the success or failure of the currency reform economy is economic system, specifically a planned economic system or market economy. As a measure of political environment, the degree of democracy also has a significant impact on the success or failure of the currency reform. Meanwhile, War has the opposite effect. But the impact of government changes is not significant, so we carried out further tests and discussions.In a word, we believe that compared to specific policies, fundamental institutional reasons have more important impact on currency reform.