Marcus Noland cites study with Stephan Haggard in The Wall Street Journal opinion article
Kim Jong Il's Fake Currency 'Reform'
12/05/2009
Marcus Noland,
The Wall Street Journal
North Korea announced a surprise currency reform this week. The move isn't about good economics, however; it is yet another stratagem by the central authorities to short-circuit the development of an entrepreneurial class independent of the state.
Currency reforms are not a bad thing in principle. Stable governments historically have used this tactic to draw a line under bad economic policies of the past, often after taming a hyperinflation. Good reforms typically involve knocking zeros off the old paper and issuing new currency, perhaps at approximate parity to major currencies such as the dollar or the euro to make it easier for citizens to hold their government accountable for macroeconomic performance. In recent years Turkey and Ghana, among others, have successfully implemented such reforms.
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