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http://ssrn.com/abstract=430561
 
 

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Commodity Money Inflation: Theory and Evidence from France in 1350-1436


Nathan Sussman


Hebrew University of Jerusalem - Department of Economics

Joseph Zeira


Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR); LUISS Guido Carli, DPTEA

February 2002

KSG Working Paper No. RWP02-008

Abstract:     
This paper presents a theory of inflation in commodity money and supports it by evidence from inflationary episodes in France during the fourteenth and fifteenth 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. Unlike fiat money, 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 an anticipated stabilization reduces demand for commodity money, which is opposite to the effect of anticipated standard stabilization on demand for fiat money.

Keywords: Economics, Macroeconomics

Number of Pages in PDF File: 46

Keywords: Economics - Macroeconomics

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Date posted: February 25, 2004  

Suggested Citation

Sussman, Nathan and Zeira, Joseph, Commodity Money Inflation: Theory and Evidence from France in 1350-1436 (February 2002). KSG Working Paper No. RWP02-008. Available at SSRN: http://ssrn.com/abstract=430561 or http://dx.doi.org/10.2139/ssrn.430561

Contact Information

Nathan Sussman
Hebrew University of Jerusalem - Department of Economics ( email )
Mount Scopus
Jerusalem, 91905
Israel
+972 02-5883139 (Phone)
+972 02-5816071 (Fax)
Joseph Zeira (Contact Author)
Hebrew University of Jerusalem - Department of Economics ( email )
Mount Scopus
Jerusalem 91905, IL 91905
Israel
+972 2 588 3256 (Phone)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
LUISS Guido Carli, DPTEA ( email )
viale Pola 12
Roma, Roma 00198
Italy
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