Modeling Small Change: A Review Article
In The Big Problem of Small Change, Sargent and Velde apply a cash-in-advance model to the history of coinage and to contemporary thought about coinage. They assert that their model accounts for puzzling observations involving the depreciation and disappearance of small coins. I question its usefulness for that purpose and for other issues pertaining to coinage. My main concern is that their model does not depict the problems usually associated with full-bodied coinage systems-problems that stem from the technological difficulties of having a full-bodied coinage system in which money is portable, divisible, durable, and recognizable.
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- Neil Wallace & Ruilin Zhou, 1996.
"A model of a currency shortage,"
569, Federal Reserve Bank of Minneapolis.
- Sargent, Thomas J & Velde, Francois R, 1999.
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