a1 Federal Reserve Bank of Minneapolis, 250 Marquette Ave., Minneapolis, MN 55480
a2 Department of Economics, Johns Hopkins University, 3400 N. Charles St., Baltimore, MD 21218
a3 University of Minnesota and Federal Reserve Bank of Minneapolis, 250 Marquette Ave., Minneapolis, MN 55480.
We establish several facts about medieval monetary debasements: they were followed by unusually large minting volumes and by increased seigniorage; old and new coins circulated concurrently; and, at least some of the time, coins were valued by weight. These facts constitute a puzzle because debasements provide no additional inducements to bring coins to the mint. On theoretical and empirical grounds, we reject explanations based on by-tale circulation, nominal contracts, and sluggish price adjustment. We conclude that debasements pose a challenge to monetary economics.