Seigniorage through Periodic Recoinage: When the Validity of Money Was Restricted in Time

VOX CEPR Policy Analysis, 2020

4 Pages Posted: 4 Sep 2020

See all articles by Roger Svensson

Roger Svensson

Research Institute of Industrial Economics (IFN)

Andreas Westermark

Sveriges Riksbank

Date Written: January 26, 2020

Abstract

A monetary system called periodic re-coinage was used during almost 200 years in large part of medieval Europe. Old coins were frequently declared invalid and had to be exchanged for new ones for an exchange fee. This system – which is equivalent to a Gesell tax – required a limited coin volume in circulation and an exchange monopoly in a geographical area. We show that such a Gesell tax works and do generate incomes for the minting authority if the tax level is sufficiently low and if the punishment for using invalid coins is sufficiently high.

Keywords: Seignior-Age, Gesell Tax, Periodic Re-Coinage, Cash-in-Advance Model, Middle Ages

JEL Classification: E42, E52, N13

Suggested Citation

Svensson, Roger and Westermark, Andreas, Seigniorage through Periodic Recoinage: When the Validity of Money Was Restricted in Time (January 26, 2020). VOX CEPR Policy Analysis, 2020, Available at SSRN: https://ssrn.com/abstract=3660781 or http://dx.doi.org/10.2139/ssrn.3660781

Roger Svensson (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
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HOME PAGE: http://www.ifn.se

Andreas Westermark

Sveriges Riksbank ( email )

Brunkebergstorg 11
Stockholm, 10337
Sweden

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