The Big Problem of Small Change by Sargent, Thomas J.,. Velde, Franois R. -- Read -- Imperial Library of Trantor

Index

Cover Page Title Page Copyright Page Dedication Page Contents List of Illustrations List of Tables Preface Acknowledgments Part I: A Problem and Its Cure

1. Introduction

Paper and gold The enduring problem of small change A model Supply side: the mint Demand side: the coin owner Shortages Price level determination Remedies A history Structure of subsequent chapters

2. A Theory

Valuation by weight or tale A basic one-denomination theory Multiple denominations Supply Demand Interactions of supply and demand Economics of interval alignments Perverse dynamics Spontaneous debasements: invasions of foreign coins Costs and Temptations Opportunity cost An open market operation from Castile An open market operation for the standard formula Transparency of opportunity cost Trusting the government with bi = 0

3. Our Philosophy of History

History and theory Clues identified by our model Cures Our history

Part II: Ideas and Technologies

4. Technology

Small coins in the Middle Ages The purchasing power of a small coin The medieval technology: hammer and pile Production costs and seigniorage Mechanization The screw press The cylinder press Other inventions The steam engine Counterfeiting, duplicating, imitating Technologies and ideas

5. Medieval Ideas about Coins and Money

Medieval jurists as advocates of Arrow-Debreu Romanists and Canonists Construction of the medieval common doctrine Sources and methods of the romanists Money in a legal doctrine of loans Tests in a one-coin environment Multiple currencies and denominations Multiple denominations Multiple metals Fluctuating exchange rates: the stationary case Multiple units of accounts Demonetization Overdue payments and extrinsic value Trends in exchange rates Debasements and currency reforms A question from public law: setting seigniorage rates Sources of the canonists Debasements and seigniorage rates Qualifications, exceptions, and discoveries Early statement of double coincidence Romanists repair the breach Canonists versus romanists on seigniorage Another breach Philosophers help The cracks widen: debasements and deficit financing Concluding remarks

6. Monetary Theory in the Renaissance

Precursors of Adam Smith Debt repayment, legal tender, and nominalism Dumoulin the revolutionary Dumoulin’s impact Dumoulin the conservative Fiat money Fiat money in theory: Butigella Double coincidence of wants revisited Other formulations Fiat money in practice The conditions for valued fiat money Restrictions on fiat money Limited legal tender Quantity theory Lessons from the Castilian experience: fiat money In Spain: Juan de Mariana (1609) Forecasting inflation In France: Henri Poullain (1612) Concluding remarks

Part III: Endemic Shortages and “Natural Experiments”

7. Clues

Shortages of small change and bullion famine Shortages and invasions of coins Ghost monies and units of account Free minting The evidence

8. Medieval Coin Shortages

England France Shortages elsewhere Concluding remarks

9. Medieval Florence

Turbulent debut of large coins in Tuscany The Quattrini affair Ghost monies as legal tender and unit of account Florentine ghost monies: details Concluding remarks Appendix A: mint equivalents and mint prices Minting Appendix B: a price index for fourteenth-century Florence

10. Medieval Venice

Four episodes Piccolo and grosso, 1250 to 1320 Evolving units of account Silver and gold, 1285 to 1353 Adaptation of units of account Soldino and ducat, 1360 to 1440 Rehearsing fiat money The torneselli in Greece Expansion near Venice Concluding remarks Appendix: mint equivalents and mint prices

11. The Price Revolution in France

Relative price change as inflation Disturbances to coin denominations A three-coin model Supply: movements in the relative prices of metals Demand: within the intervals shortages Anatomy of money and inflation Types of coins and units of account The price level Supply: the relative price of gold and silver Debasement of billon coins Mysterious movements in exchange rates Evidence of small coins shortages Policy responses Perception of the problem by the authorities Unit of account and legal tender Units of account and international trade: the fairs of Lyon The reform of 1577 Collapse of the reform Concluding remarks Appendix: mint equivalents and mint prices

12. Token and Siege Monies

Precursors of the standard formula Medieval tokens Siege money Convertible token currency: an early experiment First attempt at standard formula

Part IV: Cures and Side-effects

13. The Age of Copper

The coinage of pure copper Experiments in many countries

14. Inflation in Spain

Elements of the standard formula The Castilian experiment Monetary manipulations Restamping Crying down coins Theory of the Castilian tokens Additional notation Multiple regimes More learning: aspects of indeterminacy The evidence The end of the token coin experiment Comparison with inflation during the French Revolution Unintended consequence for Sweden Concluding remarks Appendix: money stocks and prices

15. Copycat Inflations in Seventeenth-Century Europe

France: flirting with inflation Catalonia Germany Russia The Ottoman empire

16. England Stumbles toward the Solution

Free-token and other regimes Laissez-faire or monopoly: England’s hesitations Private monopoly (1613–44) Laissez-faire The Slingsby doctrine Government monopoly The Great Recoinage of1696 The monetary system under the Restoration (1660-88) The crisis A model with underweight coins The Locke-Lowndes debate The Great Recoinage Locke: genius or idiot?

17. Britain, the Gold Standard, and the Standard Formula

The accidental standard Laws and ceilings The guinea and legal tender laws Newton’s forecasts Gold becomes the unit of account Underweight coins Neglect the pence Implementation of the standard formula

18. The Triumph of the Standard Formula

Germany’s monetary union of 1838 Bimetallism versus the gold standard Bimetallism in a small country Worldwide bimetallism Passage to gold The United States The Latin Monetary Union Free riders in monetary unions The accident of 1873 The standard formula limps into place

19. Ideas, Policies, and Outcomes

Evolutions of ideas and institutions Our history Experiments Major themes Beliefs and interests Units of account and nominal contracts Small change and monetary theory Currency boards, dollarization, and the standard formula Learning by markets and by governments

Part V: A Formal Theory

20. A Theory of Full-Bodied Small Change 21. The Model

The household Production Production of goods Production of coins Government Timing Equilibrium Analytical strategy The firm’s problem Implications of the arbitrage conditions for monetary policy Interpretations of σi Full-weight and underweight coins The household’s problem

22. Shortages: Causes and Symptoms

Equilibria with neither melting nor minting Stationary equilibria with no minting or melting Small coin shortages Small coin shortage, no minting or melting Permanent and transitory increases in £ .Logarithmic example Money shortages bring inflation Shortages of small coins through minting of large coins Shortages through melting of full-weight small coins Perverse effects and their palliatives

23. Arrangements to Eliminate Coin Shortages

A standard formula regime Variants of the standard formula The standard formula without convertibility: the Castilian experience Fiat currency

24. Our Model and Our History

Glossary References Legal Citations Index Author Index Subject Index

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