Hostname: page-component-8448b6f56d-dnltx Total loading time: 0 Render date: 2024-04-20T00:35:46.326Z Has data issue: false hasContentIssue false
  • English
  • Français

COIN ASSAYING AND COMMODITY MONEY

Published online by Cambridge University Press:  10 June 2016

Vincent Bignon  and
Richard Dutu
Vincent Bignon
Affiliation:
Banque de France, Pomone
Richard Dutu*
Affiliation:
OECD
*
Address correspondence to: Richard Dutu, Economics Department, OECD, 2, rue André Pascal, 75016 Paris, France; e-mail: richard.dutu@oecd.org.
Get access Rights & Permissions [Opens in a new window]

Abstract

We build a model of search and matching in which agents trade using coins that are imperfectly recognizable, but have access to a coin inspection technology—known as coin assaying—that reveals the intrinsic content of coins for a fee. We consider two sources of imperfect information: counterfeit coins and clipping. With counterfeits, coin assaying reduces the extent of inefficiencies associated with imperfect recognizability of coins (namely lower traded quantities and lower trading frequencies). Yet coin assaying does not necessarily increase welfare, because it unmasks counterfeits that then trade at a discount, reducing total output. With clipping, we show that agents clip for two reasons: in the hope of passing an inferior coin for a superior one, and to reduce the purchasing power of coins that are too valuable. Although coin assaying could remove the first type of clipping, it had no effect on the second.

Keywords

Commodity MoneyAsymmetric InformationCoin AssayingClipping
Type
Articles
Information
Macroeconomic Dynamics , Volume 21 , Issue 6 , September 2017 , pp. 1305 - 1335
Copyright
Copyright © Cambridge University Press 2016 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

We would like to thank Nejat Anbarci, Aleksander Berentsen, Régis Breton, Gabriele Camera, Jean Cartelier, Bertrand Gobillard, Ian King, Robert King, Guillaume Rocheteau, Mariana Rojas Breu, Isabel Schnabel, Pasquale Sgro, Brian Silverstone, Ching-jen Sun, Nathan Sussman, Warren Weber, and Randall Wright for helpful comments. In addition, we thank the audience at the ASSA meeting in New Orleans, the Bernoulli Center for Economics in Basel, the Cleveland FED, the European Workshop on Monetary Theory in Paris, the Symposium on Money and Banking in Strasbourg, the Southern Workshop in Macroeconomics in Auckland, and the Universities of Paris and Waikato. The opinions expressed here are those of the authors and should not be interpreted as necessarily those of the Banque de France, the Eurosystem, or the OECD. All remaining errors are our own.

References

REFERENCES

Andolfatto, David, Berentsen, Aleksander, and Waller, Christopher (2014) Optimal disclosure policy and undue diligence. Journal of Economic Theory 149, 128–152 Google Scholar
Andolfatto, David and Martin, Fernando M. (2012) Information disclosure and exchange media. Review of Economic Dynamics 16 (3), 527–539.Google Scholar
Ashley, Sir William (1888) An Introduction to English Economic History and Theory. Part 1. The Middle Ages. 4th ed., 1909. London: Rivingtons.Google Scholar
Berentsen, Aleksander, Molico, Miguel, and Wright, Randall (2002) Indivisibilities, lotteries, and monetary exchange. Journal of Economic Theory (107), 70–94.Google Scholar
Berentsen, Aleksander and Rocheteau, Guillaume (2002) On the efficiency of monetary exchange: How divisibility matters. Journal of Monetary Economics 49, 1621–1649.Google Scholar
Berentsen, Aleksander and Rocheteau, Guillaume (2004) Money and information. Review of Economic Studies 71 (4), 915–944.Google Scholar
Bigwood, Georges (1921–1922) Le régime juridique et économique du commerce de l'argent dans la Belgique du Moyen Age, 2 vols. Brussels: Académie Royale de Belgique, Classe de Lettres XIV.Google Scholar
Bompaire, Marc (1987) Un livre de changeur languedocien du milieu du XIVème siècle. Revue Numismatique, 6ème série 29, 118–183.Google Scholar
Bompaire, Marc (2002) Les changeurs parisiens. In Paris au Moyen Âge, résumés du séminaire de recherche, Caroline Bourlet, dir., Paris, IRHT, 2005–2010 (Æ dilis, Actes, 7).Google Scholar
Bompaire, Marc (2007) Evaluer la monnaie à la fin du moyen age. Revue Européenne des Sciences Sociales 45 (137), 69–79.CrossRefGoogle Scholar
Bonnet, Michèle (1973) Les changeurs Lyonnais au moyen age (1350–1450). Revue Historique 506, 325–352.Google Scholar
Brunner, Karl and Meltzer, Allan (1971) The uses of money: Money in the theory of an exchange economy. American Economic Review 61 (5), 784–805.Google Scholar
Burdett, Kenneth, Trejos, Alberto, and Wright, Randall (2001) Cigarette money. Journal of Economic Theory 99, 117–142.Google Scholar
Camera, Gabriele (2005) Distributional aspects of the divisibility of money: An example. Economic Theory 25, 487–495.CrossRefGoogle Scholar
Chevalier, Bernard (1973) Les changeurs en France dans la première moitié du XIVème siècle. In Economies et Sociétés au Moyen Age Mélanges offerts à Edouard Perroy, Publications de la Sorbonne, Série “Etudes,” vol. 5, pp. 153–160.Google Scholar
Cipolla, Carlo (1956) Money, Prices and Civilizations in the Mediterranean World, Fifth to Seventeenth Century. New York: Gordian Press.Google Scholar
De Roover, Raymond (1948) Money, Banking and Credit in Medieval Bruges. Cambridge, MA: The Medieval Academy of America.Google Scholar
Deviatov, Alexei (2006) Money creation in a random matching model. Topics in Macroeconomics 6 (3), article 5.Google Scholar
Favreau, Robert (1964) Les changeurs du Royaume sous le règne de Louis XI. Bibliothèque de l'Ecole des Chartes CXXII, année 1964.Google Scholar
Gandal, Neil and Sussman, Nathan (1997) Asymmetric information and commodity money: Tickling the tolerance in medieval France. Journal of Money, Credit and Banking 29, 440–457.Google Scholar
Glassman, Deborah and Redish, Angela (1988) Currency depreciation in early modern England and France. Explorations in Economic History 50, 789–805.Google Scholar
Gorton, Gary and Ordoñez, Guillermo (2012) Collateral Crises. NBER working paper 17771.Google Scholar
Green, Ed and Weber, Warren (1996) Will the new $100 bill decrease counterfeiting? Federal Reserve Bank of Minneapolis Quarterly Review 20, 3–10.Google Scholar
Grierson, Philip (1979) Coinage in the Cely papers. In Later Medieval Numismatics, Variorum, Londres, XV, from Miscellanea medievalia F. Niermeyer, Groningue, 1967, 375–404.Google Scholar
Hirshleifer, Jack (1971) The private and social value of information and the reward to inventive activity. American Economic Review 61 (4), 561–574.Google Scholar
Jambu, Jérome (2007) Frauder avec la monnaie à l'époque moderne, de Louis XIV à la Révolution. In Béaur, G., Bonin, H., and Lemercier, C. (eds.), Fraude, contrefaçon et contrebande. De l'Antiquité à nos jours, pp. 249–278. Geneva: Droz.Google Scholar
Kaplanis, Costas (2003) The debasement of the “Dollar of the Middle Ages.” Journal of Economic History 63 (3), 768–801.CrossRefGoogle Scholar
King, Robert and Plosser, Charles (1986) Money as the mechanism of exchange. Journal of Monetary Economics 17, 93–115.CrossRefGoogle Scholar
Kiyotaki, Nobuhiro and Wright, Randall (1989) On money as a medium of exchange. Journal of Political Economy 97, 927–954.Google Scholar
Kullti, Klaus (1996) A monetary economy with counterfeiting. Journal of Economics 63, 175–186.CrossRefGoogle Scholar
Latimer, Paul (2001) The English inflation of 1180–1220 reconsidered. Past and Present 171, 3–29.CrossRefGoogle Scholar
Lee, Majong and Wallace, Neil (2006) Optimal divisibility of money when money is costly to produce. Review of Economic Dynamics 9, 541–556.Google Scholar
Lester, Benjamin, Postelwaite, Andrew, and Wright, Randall (2011) Information and liquidity. Journal of Money, Credit and Banking 43 (7), 355–377.Google Scholar
Li, Yiting (1995) Commodity money under private information. Journal of Monetary Economics 36, 573–592.Google Scholar
Lothian, James R. (2003) Exchange rates. In Oxford Encyclopedia of Economic History. New York: Oxford University Press.Google Scholar
Mayhew, Nicholas (2012) Silver in England 1600–1800. In Munro, J. (ed.), Money in the Preindustrial World. London: Pickering and Chatto.Google Scholar
Morris, Stephen and Shin, Huyn Song (2002) Social value of public information. American Economic Review 92 (5), 1521–1534 CrossRefGoogle Scholar
Munro, John H. (1988) Deflation and the petty coinage problem in the late-medieval economy: The case of Flanders, 1334–l484. Explorations in Economic History 25, 387–423.Google Scholar
Munro, John H. (2000) A maze of medieval monetary metrology: Determining mint weights in Flanders, France and England from the economics of counterfeiting, 1388–1469. Journal of European Economic History 29 (1), 173–199.Google Scholar
Munro, John H. (ed.) (2012) Money in the Pre-industrial World. London: Pickering and Chatto.Google Scholar
Nosal, Ed and Wallace, Neil (2007) A model of (the threat) of counterfeiting. Journal of Monetary Economics 54, 994–1001.Google Scholar
Quercioli, Elena and Smith, Lones (2015) The economics of counterfeiting. Econometrica 83 (3), 1211–1236.Google Scholar
Quinn, Stephen (1996) Gold, silver, and the glorious revolution: Arbitrage between bills of exchanges and bullion. Economic History Review 49, 473–490.Google Scholar
Redish, Angela (2000) Bimetallism: An Economic and Historical Analysis. Cambridge, UK: Cambridge University Press.Google Scholar
Roncière, Charles de la (1973) Un changeur florentin du Trecento : Lippo di Fede del Sega (1285 env.–1363 env.). Paris: S.E.V.P.E.N.Google Scholar
Royo, Joé Antonio Mateos, (2012) The burdens of tradition. In Munro, J. (ed.), Money in the Preindustrial World, pp. 111–128. London: Pickering and Chatto.Google Scholar
Sargent, Thomas and Velde, François (2002) The Big Problem of Small Change. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Shi, Shouyong (1995) Money and prices: A model of search and bargaining. Journal of Economic Theory 67, 467–496.Google Scholar
Spufford, Peter (1986) Handbook of Medieval Exchange. London: Royal Historical Society.Google Scholar
Trejos, Alberto (1999) Search, bargaining, money, and prices under private information. International Economic Review, 40 (3), 679–695.Google Scholar
Trejos, Alberto and Wright, Randall (1995) Search, bargaining, money, and prices. Journal of Political Economy 103, 118–141.Google Scholar
Udovitch, Abraham (1975) Reflections on the institutions of credits and banking in the medieval Islamic Near East. Studia Islamica 41, 5–21.Google Scholar
Velde, François, Weber, Warren, and Wright, Randall (1999) A model of commodity money with applications to Gresham's law and the debasement puzzle. Review of Economic Dynamics 2, 293–323.Google Scholar
Von Glahn, Richard (1996) Fountain of Fortune: Money and Monetary Policy in China, 1000–1700. Berkeley and Los Angeles: University of California Press.Google Scholar
Wallace, Neil and Zhou, Ruilin (1997) A model of a currency shortage. Journal of Monetary Economics 40, 555–572.Google Scholar
Watherston, James B. (1847) A Familiar Explanation of the Art of Assaying Gold and Silver. London: Smith, Elder and Co.Google Scholar
Williamson, Stephen (2002) Private money and counterfeiting. Federal Reserve Bank of Richmond Economic Quarterly 88 (3), 37–57.Google Scholar
Williamson, Stephen and Wright, Randall (1994) Barter and monetary exchange under private information. American Economic Review 84, 104–123.Google Scholar
Williamson, Stephen and Wright, Randall (2010) New monetarist economics: Methods. Federal Reserve Bank of St. Louis Review 92 (4), 265–302.Google Scholar