Renovatio Monetae: Gesell Taxes in Practice
Roger Svensson and
Andreas Westermark
No 1083, Working Paper Series from Research Institute of Industrial Economics
Abstract:
Gesell taxes on money holdings have received attention in recent decades as a way of alleviating the zero lower bound on interest rates. Less known is that such a tax was the predominant method used to generate seigniorage in large parts of medieval Europe for around two centuries. When the Gesell tax was levied, current coins ceased to be legal tender and had to be exchanged into new coins for a fee – an institution known as renovatio monetae or periodic re-coinage. This could occur as often as twice a year. Using a cash-in-advance model, prices increase over time during an issue period and falls immediately after the re-coinage date. Agents remint coins and the system generates tax revenues if the tax is su¢ ciently low, if the time period between re-coinages is su¢ ciently long, and if the probability of being penalized for using illegal coins is su¢ ciently high.
Keywords: Seigniorage; Gesell tax; Periodic re-coinage: Cash-in-advance model (search for similar items in EconPapers)
JEL-codes: E31 E42 E52 N13 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2015-09-08
New Economics Papers: this item is included in nep-mac and nep-pbe
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Related works:
Working Paper: Renovatio Monetae: Gesell Taxes in Practice (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1083
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