Inter-temporal Changes in Well-being During Conditions of Hyperinflation: Evidence from Zimbabwe

Abstract

In the last decade, the economy of Zimbabwe underwent unprecedented stress and change. Starting in 2000, land reform began with farm invasions. This process eventually evolved into a government-guided fast-track reform. During this process, the international community imposed sanctions, and these factors, together with a severe drought, let to a reduction in availability of the main food staple. Inflationary pressures built and were exacerbated by foreign exchange shortages. The economy slowed due to debt overhang and dwindling investment caused in part by increased uncertainty. Several factors contributed to deterioration of the value of the Zimbabwean Dollar and by mid-2007, hyperinflation became rampant. The economic crisis began to abate in 2008 and political agreements signed in 2008 and implemented in 2009 led to further stabilisation. As Zimbabwe moves forward, it is important to understand the conditions faced by the poor, and how they have changed during the period of...