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The Debasement Puzzle: An Essay on Medieval Monetary Policy

Working Paper 536 | Published September 1, 1995

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Authors

Warren E. Weber Retired Economist
Arthur J. Rolnick Senior Vice President and Director of Research, 1985-2010
The Debasement Puzzle: An Essay on Medieval Monetary Policy

Abstract

This paper establishes the stylized fact that medieval debasements were accompanied by unusually large minting volumes and revenues. This fact is a puzzle under the commonly held view that metallic coins are commodity money and exchange by weight. An existing explanation is that debased coins were used to reduce the real burden of nominally denominated debts. This explanation is logically flawed: nothing prevents agents from renegotiating contracts and avoid incurring minting costs. The paper also establishes other facts about monetary mutations, which altogether pose a challenge to monetary economics.


Published in: _Journal of Economic History_ (Vol. 56, No. 4, December 1996, pp. 789-808), https://doi.org/10.1017/S0022050700017472.