The Inflation Stabilization in Bolivia Revisited

Bolivia experienced a severe case of hyperinflation between April 1984 and August 1985. In those seventeen months, consumer prices increased by a factor of 625. The monthly inflation rate went as high as 182 percent, in February 1985. As a background information it should be mentioned that Bolivia was not a country of chronic high inflation until the early 1980s. The Bolivian hyperinflation ceased abruptly after a severe stabilization program was announced in late August 1985. In this short paper I examine the conditions on which high inflation appeared, why it accelerated, what factors contributed to stop it, and finally what were the costs of stabilization.