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Working Paper, No. 1997-08, 1997
The Big Problem with Small Change

Western Europe was plagued with currency shortages from the 14th to the 19th century, at which time a standard formula had been devised to cure the problem. The authors use a cash in-advance model of commodity money to define a currency shortage, show that they could develop and persist under a commodity money regime and analyze the role played by each ingredient in the standard formula. A companion paper documents the evolution of monetary theory, monetary experiments and minting technology over the course of six hundred years.

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