# Monetary overhang

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**Monetary overhang** is a phenomenon in which people have more money holdings than they would normally choose to because of a lack of ability to spend it. In an economy where there is monetary overhang due to shortages, if price controls are removed, the overhang tends to produce a burst of open inflation,[1] or too much money chasing too few goods, thus raising prices. Monetary overhang can also be caused by excess credit.[2]

This is a phenomenon often present with repressed inflation and [financial repression](/source/Financial_repression), and was common in [centrally planned economies](/source/Planned_economy) like the [Soviet Union](/source/Soviet_Union). The Soviet Union experienced monetary overhang from the mid-1980s onwards. This was reported by the IMF in 1991.[3] Subsequent to this report, the [USSR collapsed](/source/Dissolution_of_the_Soviet_Union).

## References

1. Black, Miles; Hashimzade, Nigar; Myles, Gareth (eds.) (2009). ["money overhang"](https://www.oxfordreference.com/display/10.1093/oi/authority.20110803100205464). *A Dictionary of Economics*. 3rd ed. Oxford Reference website: Oxford University Press. [doi:10.1093/acref/9780199237043.001.0001](https://doi.org/10.1093/acref/9780199237043.001.0001). ISBN 9780199237043.

1. ["How China Avoided Soviet-Style Collapse"](https://www.noemamag.com/how-china-avoided-soviet-style-collapse/). *Noema*. Los Angeles: Bergruen Institute. September 16, 2021.

1. Cottareli, Carlo (June 1991). ["IMF Working Paper No. 91/55: Forced Savings and Repressed Inflation in the Soviet Union: Some Empirical Results"](https://www.imf.org/en/Publications/WP/Issues/2016/12/30/Forced-Savings-and-Repressed-Inflation-in-the-Soviet-Union-Some-Empirical-Results-933). International Monetary Fund. [SSRN 884851](https://ssrn.com/abstract=884851)

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