Do We Need a Distinct Monetary Constitution?

28 Pages Posted: 24 Aug 2010

See all articles by Steven Horwitz

Steven Horwitz

Ball State University - Department of Economics

Date Written: August 10, 2010


The Chicago-Virginia tradition of political economy has rejected both competitive money production and money’s politicization via post-constitutional bargaining, opting instead for constitutionalization. This paper provides a constitutional political economy of the costs of inflation and argues that competitive money production is not subject to the pro-cyclicality that concerns constitutional political economy. It also meets the standard of predictability that motivates constitutional perspectives, although at the level of individual prices rather than the price level. An effective monetary constitution is implicit in any constitution that protects rights to property, contract, and exchange and sets limits on the democratic process.

Keywords: Constitutional Political Economy, Monetary Regimes, Free Banking, Inflation

JEL Classification: E58, N2

Suggested Citation

Horwitz, Steven, Do We Need a Distinct Monetary Constitution? (August 10, 2010). Available at SSRN: or

Steven Horwitz (Contact Author)

Ball State University - Department of Economics ( email )

Department of Economics
Ball State University
Muncie, IN 47306
United States
765 285 5384 (Phone)

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