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

Nathan Sussman and Joseph Zeira

Working Paper Series from Harvard University, John F. Kennedy School of Government

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.

Date: 2002-02
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Journal Article: Commodity money inflation: theory and evidence from France in 1350-1436 (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:rwp02-008

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