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The debasement puzzle: an essay on medieval monetary history

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  • Arthur J. Rolnick
  • Francois R. Velde
  • Warren E. Weber

Abstract

This study establishes several facts about medieval monetary debasements: they were followed by unusually large minting volumes and by increased seigniorage; old and new coins circulated concurrently; and, at least some of the time, coins were valued by weight. These facts constitute a puzzle because debasements provide no additional inducements to bring coins to the mint. On theoretical and empirical grounds, the authors reject explanations based on by-tale circulation, nominal contracts, and sluggish price adjustment. They conclude that debasements pose a challenge to monetary economics. This article was originally published in the Journal of Economic History (December 1996, vol. 56, no. 4, pp. 789--808). It is reprinted in the Federal Reserve Bank of Minneapolis Quarterly Review with the permission of Cambridge University Press.

Suggested Citation

  • 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.
  • Handle: RePEc:fip:fedmqr:y:1997:i:fall:p:8-20:n:v.21no.4
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    References listed on IDEAS

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    1. N. J. Mayhew, 1974. "Numismatic Evidence and Falling Prices in the Fourteenth Century," Economic History Review, Economic History Society, vol. 27(1), pages 1-15, February.
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    Cited by:

    1. Stephen F. Quinn & William Roberds, 2005. "The big problem of large bills: the Bank of Amsterdam and the origins of central banking," FRB Atlanta Working Paper 2005-16, Federal Reserve Bank of Atlanta.
    2. Warren E. Weber & Angela Redish, 2008. "A Model of Small Change Shortages," 2008 Meeting Papers 677, Society for Economic Dynamics.
    3. François R. Velde & Warren E. Weber & Randall Wright, 1999. "A Model of Commodity Money, with Applications to Gresham's Law and the Debasement Puzzle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(1), pages 291-323, January.
    4. Volckart, Oliver, 2008. "‘The big problem of the petty coins’, and how it could be solved in the late Middle Ages," Economic History Working Papers 22310, London School of Economics and Political Science, Department of Economic History.
    5. 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.
    6. 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.
    7. Gerald P. Dwyer & James R. Lothian, 2002. "International money and common currencies in historical perspective," FRB Atlanta Working Paper 2002-7, Federal Reserve Bank of Atlanta.
    8. Gerald P. Dwyer & James R. Lothian, 2003. "The economics of international monies," FRB Atlanta Working Paper 2003-37, Federal Reserve Bank of Atlanta.
    9. Hernandez-Chanto, Allan, 2016. "The Extrinsic Value of Low-Denomination Money Holdings," MPRA Paper 72348, University Library of Munich, Germany, revised 15 Jan 2016.
    10. Manjong Lee, 2007. "Indivisibility and Non-Neutrality of Money," Korean Economic Review, Korean Economic Association, pages 223-242.
    11. Manjong Lee & Neil Wallace, 2006. "Optimal divisibility when money is costly to produce," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(3), pages 541-556, July.
    12. Sussman, Nathan & Zeira, Joseph, 2003. "Commodity money inflation: theory and evidence from France in 1350-1436," Journal of Monetary Economics, Elsevier, pages 1769-1793.
    13. Von dem Berge, Lukas, 2014. "Parallel currencies in historical perspective," CAWM Discussion Papers 75, University of Münster, Center of Applied Economic Research Münster (CAWM).
    14. Luciano Pezzolo, 2006. "The rise and decline of a great power: Venice 1250-1650," Working Papers 2006_27, Department of Economics, University of Venice "Ca' Foscari".
    15. Kim, Young Sik & Lee, Manjong, 2012. "Intermediary cost and coexistence puzzle," Economics Letters, Elsevier, pages 142-145.
    16. Gary B. Gorton, 2016. "The History and Economics of Safe Assets," NBER Working Papers 22210, National Bureau of Economic Research, Inc.

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