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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- Sargent, Thomas J & Velde, Francois R, 1999.
"The Big Problem of Small Change,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 31(2), pages 137-61, May.
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- Neil Wallace & Ruilin Zhou, 1996.
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569, Federal Reserve Bank of Minneapolis.
- Shouyong Shi, 1995.
"Money and Prices: A Model of Search and Bargaining,"
916, Queen's University, Department of Economics.
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- Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-54, August.
- Hanson, John R, II, 1979. "Money in the Colonial American Economy: An Extension," Economic Inquiry, Western Economic Association International, vol. 17(2), pages 281-86, April.
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