DOI: 10.36347/sjebm.2016.v03i05.001

Pages: 244-251

The main purpose of this paper is to examine whether Sudan's episode of hyperinflation was a fiscal or monetary phenomenon. Bulk of scholars point out that hyperinflation is a monetary phenomenon and caused and derived by monetary situations. Yet, I argue that it is a fiscal phenomenon resulted from huge budget deficit, which is financed by printing money and/or borrowing from banking system. The aim of this short run analysis is to prop my argument that fiscal policy plays an important role to end hyperinflation in Sudan. Also I try to examine the short-run fluctuation in Sudan which happened during 1996 and 1997 as I would like to figure out what factor influenced hyperinflation to decline from 164% in August 1996. It is worth mentioning that, I have carried out some amendments on the data. For example, some variables are classified on the nominal terms such as money supply, exchange rate, and price level, whereas others are classified as non-nominal variables e.g. inflation.