The Rise and Fall of Paper Money in Yuan China, 1260-1368
Nuno Palma and
Economics Discussion Paper Series from Economics, The University of Manchester
Following the Mongol invasion of China, the Yuan (1260–1368) dynasty was the first political regime in history able to deploy paper money as the sole legal tender. Drawing on a new dataset on money issues, imperial grants, and prices, we show that a silver standard initially consolidated the Chinese currency market. However, persistent fiscal pressures eventually compelled rulers to ease the monetary standard, and a fiat standard was adopted, leading to inflation levels which doubled the price level in less than a decade. We show that military pressure generated fiscal demands which led to over-issuance, and we reject the role of excessive imperial grants in triggering the over-issue of money.
Keywords: Paper money; silver standard; fiat money; Yuan China (search for similar items in EconPapers)
JEL-codes: E42 N15 N45 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-his, nep-mon and nep-pay
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