Commodity money inflation: Theory and evidence from France in 1350-1436

Nathan Sussman, Joseph Zeira*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

20 Scopus citations

Abstract

This paper presents a theory of inflation in commodity money and supports it by evidence from inflationary episodes in France during the 14th and 15th 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. However, 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 anticipated stabilization reduces demand for commodity money.

Original languageEnglish
Pages (from-to)1769-1793
Number of pages25
JournalJournal of Monetary Economics
Volume50
Issue number8
DOIs
StatePublished - Nov 2003

Keywords

  • Commodity money
  • Debasement
  • Inflation
  • Seignorage
  • Stabilization

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