Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322218 
Year of Publication: 
2025
Series/Report no.: 
Working Paper No. 142
Publisher: 
Università Cattolica del Sacro Cuore, Dipartimento di Economia e Finanza (DISCE), Milano
Abstract: 
We delve into Venezuela's 2018-2019 hyperinflation episode to examine the policy constraints autocratic governments face during extreme economic distress. We develop a simple model that reflects dynamics in a segmented foreign exchange (FX) market and allows us to understand how media coverage may influence discretionary policy controls. Leveraging a special dataset of daily consumer prices collected by volunteers, we show that official FX manipulation allowed the government to mitigate hyperinflationary pressures by maintaining overvalued levels relative to the black-market that in turn helped anchor expectations. Crucially, our empirical results indicate that media coverage significantly constrained the government's ability to manipulate official FX rates, despite ample reserves and a de facto control over hard currency supply. The findings offer new evidence that, even in low-accountability regimes, policy discretion is limited by media-driven scrutiny.
Subjects: 
hyperinflation
media coverage
exchange rate
policy discretion
autocratic regime
JEL: 
D80
E31
E50
H50
P20
Document Type: 
Working Paper

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