TY - JOUR
T1 - Commodity money inflation
T2 - Theory and evidence from France in 1350-1436
AU - Sussman, Nathan
AU - Zeira, Joseph
PY - 2003/11
Y1 - 2003/11
N2 - 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.
AB - 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.
KW - Commodity money
KW - Debasement
KW - Inflation
KW - Seignorage
KW - Stabilization
UR - http://www.scopus.com/inward/record.url?scp=0344441808&partnerID=8YFLogxK
U2 - 10.1016/j.jmoneco.2003.01.003
DO - 10.1016/j.jmoneco.2003.01.003
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AN - SCOPUS:0344441808
SN - 0304-3932
VL - 50
SP - 1769
EP - 1793
JO - Journal of Monetary Economics
JF - Journal of Monetary Economics
IS - 8
ER -