Cash shortages and consumption during Venezuela’s hyperinflation

Carolina Pagliacci

Applied Economics Letters, 2024, vol. 31, issue 10, 948-952

Abstract: This paper tests whether cash shortages observed during the hyperinflation in Venezuela reduced consumption. Volumetric consumption indices are constructed for two types of goods: basic and non-basic goods, using data from Nielsen Venezuela at the national level. We find that cash shortages did reduce basic goods consumption but did not affect non-basic goods. The greatest consumption losses occurred between the forced demonetization of December 2016 and the peak of hyperinflation (September 2018). Those losses range between 3 and 10% points (p.p.) of the monthly consumption that would have been observed without the monetary restrictions.

Date: 2024
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DOI: 10.1080/13504851.2022.2156467

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