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Commodity Money Inflation: Theory and Evidence from France in 1350-1436

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Author Info
Sussman, Nathan (Hebrew U of Jerusalem)
Zeira, Joseph (Hebrew U of Jerusalem, Harvard U, and CEPR)

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Abstract

This paper presents a theory of inflation in commodity money and supports it by evidence from inflationary episodes in France during the fourteenth and fifteenth centuries. The paper shows that commodity money can be inflated similarly to fiat money through repeated debasements, which act like devaluations. Furthermore, as with fiat money, demand for commodity money falls with inflation. Unlike fiat money, at high rates of inflation demand for commodity money becomes insensitive to inflation, since commodity money has intrinsic value in addition to its transactions value. Finally, we show that an anticipated stabilization reduces demand for commodity money, which is opposite to the effect of anticipated standard stabilization on demand for fiat money.

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Paper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp02-008.

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Date of creation: Feb 2002
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Handle: RePEc:ecl:harjfk:rwp02-008

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Kindleberger, Charles P., 1991. "The Economic Crisis of 1619 to 1623," The Journal of Economic History, Cambridge University Press, vol. 51(01), pages 149-175, March. [Downloadable!]
  2. Li, Yiting, 1995. "Commodity money under private information," Journal of Monetary Economics, Elsevier, vol. 36(3), pages 573-592, December. [Downloadable!] (restricted)
  3. Arthur J. Rolnick & Francois R. Velde & Warren E. Weber, 1997. "The debasement puzzle: an essay on medieval monetary history," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 8-20. [Downloadable!]
  4. Pamuk, ?evket, 1997. "In the Absence of Domestic Currency: Debased European Coinage in the Seventeenth?Century Ottoman Empire," The Journal of Economic History, Cambridge University Press, vol. 57(02), pages 345-366, June. [Downloadable!]
  5. Bruce D. Smith & Thomas J. Sargent, 1997. "Coinage, debasements, and Gresham's laws," Economic Theory, Springer, vol. 10(2), pages 197-226. [Downloadable!] (restricted)
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  6. Sussman, Nathan, 1993. "Debasements, Royal Revenues, and Inflation in France During the Hundred Years' War, 1415?1422," The Journal of Economic History, Cambridge University Press, vol. 53(01), pages 44-70, March. [Downloadable!]
  7. Rolnick, Arthur J. & Velde, Fran?ois R. & Weber, Warren E., 1996. "The Debasement Puzzle: An Essay on Medieval Monetary History," The Journal of Economic History, Cambridge University Press, vol. 56(04), pages 789-808, December. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. John H. Munro, 2009. "Coinage and Monetary Policies in Burgundian Flanders during the late-medieval 'Bullion Famines',. 1384 - 1482," Working Papers tecipa-361, University of Toronto, Department of Economics. [Downloadable!]
  2. Stephen Quinn & William Roberds, 2006. "An economic explanation of the early Bank of Amsterdam, debasement, bills of exchange, and the emergence of the first central bank," Working Paper 2006-13, Federal Reserve Bank of Atlanta. [Downloadable!]
  3. Michael Graff, 2008. "The Quantity Theory of Money in Historical Perspective," Working papers 08-196, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
  4. Oliver Volckart, 2007. "Rules, Discretion or Reputation? Monetary Policies and the Efficiency of Financial Markets in Germany, 14th to 16th Centuries," SFB 649 Discussion Papers SFB649DP2007-007, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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