Asymmetric Information and Commodity Money: Tickling the Tolerance in Medieval France

Journal of Money, Credit and Banking, Vol. 29, No. 4, Part 1 (November 1997)

Posted: 19 Nov 1997

See all articles by Neil Gandal

Neil Gandal

Berglas School of Economics, Tel Aviv University; Centre for Economic Policy Research (CEPR)

Nathan Sussman

Graduate Institute Geneva, Centre for Finance and Development

Abstract

An important development in Europe was the emergence of nationally circulating commodity money. Asymmetric information between coin producers and users provided rulers with an opportunity to supply a public good: standard universally accepted coins. We describe the development of a sophisticated monetary system (bureaucracy) in medieval France. In the monitoring scheme employed by the crown, fines were levied against private mint masters when coins did not meet the standards. Yet, fineness or quality of the coin was measured in a way favorable to the mint master. We show that this method implicitly encouraged the mint masters to produce low quality coins in such a way that the crown earned rents and we measure these rents.

JEL Classification: D82, E51

Suggested Citation

Gandal, Neil and Sussman, Nathan, Asymmetric Information and Commodity Money: Tickling the Tolerance in Medieval France. Journal of Money, Credit and Banking, Vol. 29, No. 4, Part 1 (November 1997), Available at SSRN: https://ssrn.com/abstract=42390

Neil Gandal

Berglas School of Economics, Tel Aviv University ( email )

Tel Aviv University
Tel Aviv 69978
Israel
+972 3 640 9907 (Phone)
+972 3 640 9908 (Fax)

HOME PAGE: http://www.neilgandal.com/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Nathan Sussman (Contact Author)

Graduate Institute Geneva, Centre for Finance and Development ( email )

Switzerland

HOME PAGE: http://https://graduateinstitute.ch/academic-departments/faculty/nathan-sussman

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