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A Model of Commodity Money, with Applications to Gresham's Law and the Debasement Puzzle Author info | Abstract | Publisher info | Download info | Related research | Statistics François R. Velde (Federal Reserve Bank of Chicago)
Warren E. Weber (Federal Reserve Bank of Minneapolis)
Randall Wright (Department of Economics, University of Pennsylvania)
Additional information is available for the following
registered author(s):
What are the conditions under which Gresham's Law holds? And what are the mechanics of a debasement? To analyze these questions, we develop a model of commodity money with light and heavy coins, imperfect information, and prices determined via bilateral bargaining. There are equilibria with neither, both, or only one type of coin in circulation. When both circulate, coins may trade by weight or by tale. We discuss the extent to which Gresham's Law holds in the various cases. Following a debasement, depending on the incentives offered, equilibria exist with positive seigniorage and a mixture of old and new coins in circulation. (Copyright: Elsevier)
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics .
Volume (Year): 2 (1999)
Issue (Month): 1 (January)
Pages: 291-323
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Handle: RePEc:red:issued:v:2:y:1999:i:1:p:291-323Contact details of provider: Postal: Review of Economic Dynamics Academic Press Editorial Office 525 "B" Street, Suite 1900 San Diego, CA 92101 Fax: 1-860-486-4463 Email: Web page: http://www.EconomicDynamics.org/review.htm More information through EDIRC
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Keywords: random matching ; commodity money ; Gresham's Law ; debasement ; asymmetric information ; Other versions of this item:
Paper Francois R. Velde & Warren E. Weber & Randall Wright, 1997.
"A model of commodity money, with applications to Gresham's law and the debasement puzzle ,"
Staff Report
215, Federal Reserve Bank of Minneapolis.
[Downloadable!] Francois R. Velde & Warren E. Weber & Randall Wright, 1997.
"A model of commodity money, with applications to Gresham's Law and the debasement puzzle ,"
Working Paper Series, Macroeconomic Issues
WP-97-12, Federal Reserve Bank of Chicago.
[Downloadable!] Francois R. Velde & Warren E. Weber & Randall Wright, .
"A Model of Commodity Money, With Application to Gresham's Law and the Debasement Puzzle ,"
CARESS Working Papres
97-7, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
Find related papers by JEL classification: E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System N10 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - General, International, or Comparative
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