Tuesday, August 13, 2019
Inflation Essay Example | Topics and Well Written Essays - 500 words
Inflation - Essay Example There have been cases around the globe known as hyperinflation. Though there is no official definition for it, it is generally accepted as a 50% annual inflation rate. Ecuador suffered through a 96% inflation rate in 2000 ("Background Note: Ecuador"). This was caused by a weak economy, massive debt from El Nino in 1998, and a floating currency. The president was ousted in Jan. 2000 and caused a 75% spike in a one-month period. The new government restructured the debt, privatized state owned industries, and tied the currency to the US dollar. The following years saw lower rates and it had dropped to 1.9% in 2004 ("Background Note: Ecuador"). The war and economic hardships in the former Yugoslavia resulted in inflation rates in the period 1971-91 of 69 percent, with hyperinflation of more than 50 percent per month in 1989 (Hanke). According to experts, Slobodan Milosevic triggered the hyperinflation by granting $1.8 billion in unauthorized credits to Serbian-owned enterprises (Hanke). It was only brought under control when the war ended and a new government was installed. Though the UAE and Dubai have not seen these rates of inflation, it has been on the rise in recent years. It was 2.8% in 2002 and is estimated to hit 20% in 2006. That was up from 10.5% in 2005 ("United Arab Emirates"). The rate was 3.2% and 4.6% in 2003-2004.