To read the full version of this content please select one of the options below:

High inflation episode of 1996–97 and the Bulgarian currency board

Stacic Beck (University of Delaware, Newark, DE19716, USA
Jeffrey B. Miller (University of Delaware, Newark, 0DE 19716, USA
Mohsen M. Saad (American University of Sharjah, United Arab Emirates

International Journal of Development Issues

ISSN: 1446-8956

Article publication date: 1 February 2005



Why did inflation fall so dramatically after the establishment of a currency board in Bulgaria in 1997? The establishment of the currency board was the response to a very severe financial crisis where inflation reached hyperinflationary levels. After the currency board was introduced, inflation fell even more spectacularly than it had risen with prices rising less than 10% annually during 1998 and 1999. Was this sudden drop in inflation due to a “discipline” effect caused by a reduction in money growth rates or to a “confidence” effect that created lower inflation expectations thus leading to higher money demand? We find strong indirect evidence for a confidence effect but less support for a discipline effect.


Beck, S., Miller, J.B. and Saad, M.M. (2005), "High inflation episode of 1996–97 and the Bulgarian currency board", International Journal of Development Issues, Vol. 4 No. 2, pp. 95-121.



Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited