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Cigarette Money and Black Market Prices around the 1948 German Miracle

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  • Vincent Bignon

Abstract

This paper is an empirical study of the distribution of black prices among 120 Bavarian locations at two dates, the beginning of July, 1947 and the end of June, 1948. It shows huge differences in the liquidity of those goods either when measured with the coefficient of variation or the number of locations in which those goods were traded. The main finding is that liquidity of cigarette was very high either when measured by the coefficient of variation and or the number of counties that traded them. This made them special, even when compared with a pure fiat object such as the US dollar. Consistently with the insights of the modern theory of money, the high liquidity of cigarettes is indicative of its use as money.

Suggested Citation

  • Vincent Bignon, 2009. "Cigarette Money and Black Market Prices around the 1948 German Miracle," EconomiX Working Papers 2009-2, University of Paris Nanterre, EconomiX.
  • Handle: RePEc:drm:wpaper:2009-2
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    File URL: http://economix.fr/pdf/dt/2009/WP_EcoX_2009-02.pdf
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    1. Xavier Cuadras-Morato & Randall Wright, "undated". "On Money as a Medium of Exchange When Goods Vary by Supply and Demand," CARESS Working Papres 97-1, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
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    Cited by:

    1. Georges Gallais-Hamonno & Thi-hong-van Hoang & Kim Oosterlinck, 2016. "Price Formation on Clandestine Markets: The Case of the Paris Gold Market during WWII," Working Papers CEB 16-048, ULB -- Universite Libre de Bruxelles.

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