Monetary Regimes and Inflation: History, Economic and Political Relationships

Monetary Regimes and Inflation: History, Economic and Political Relationships

by Peter Bernholz
     
 

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ISBN-10: 1845427785

ISBN-13: 9781845427788

Pub. Date: 03/01/2006

Publisher: Elgar, Edward Publishing, Inc.

Bernholz (economics, U. Basel, Switzerland) adds some different dimensions to the study of inflation. He traces its history from the Roman currency debasement in the fourth century to the hyperinflation of the 1990s, includes all 29 hyperinflation episodes in history (all but one in the 20th century) and the currency reforms that ended them, considers the political

Overview

Bernholz (economics, U. Basel, Switzerland) adds some different dimensions to the study of inflation. He traces its history from the Roman currency debasement in the fourth century to the hyperinflation of the 1990s, includes all 29 hyperinflation episodes in history (all but one in the 20th century) and the currency reforms that ended them, considers the political forces responsible for inflation and for ending it, emphasizes the importance of monetary regimes for stability, argues that certain qualitative characteristics of inflation and its consequences are stable traits over centuries, and distinguishes between the different traits and cures of moderate and high inflation. Annotation ©2003 Book News, Inc., Portland, OR

Product Details

ISBN-13:
9781845427788
Publisher:
Elgar, Edward Publishing, Inc.
Publication date:
03/01/2006
Pages:
224
Product dimensions:
6.10(w) x 9.10(h) x 0.70(d)

Table of Contents

Prefaceix
Acknowledgementsxi
1Introduction1
2Inflation and monetary regimes3
2.1Inflations: long-term historical evidence3
2.2A description of different monetary regimes5
2.3Monetary regimes and inflation7
2.4The inflationary bias of political systems11
2.5The influence of monetary regimes14
2.6Some other characteristics of monetary constitutions15
2.7Conclusions18
3Inflation under metallic monetary regimes21
3.1Inflation caused by an additional supply of the monetary metal21
3.2The debasement of metal standards by rulers24
3.3Reasons for the introduction and maintenance of stable metallic monetary regimes30
3.4Price and exchange controls32
3.5Consequences of inflation for the real economy34
3.6Conclusions36
4Moderate paper money inflations40
4.1The introduction of paper money40
4.2Paper money inflation in Sweden during the 18th century41
4.3Paper money inflation in Massachusetts, 1703-174945
4.4Inflation during the American War of Independence47
4.5Paper money inflation during the American Civil War50
4.6Chinese paper money inflation under the Ming regime52
4.7Conclusions61
5Characteristics of hyperinflations64
Introduction64
5.1Some characteristics of the French hyperinflation66
5.2Hyperinflations are caused by government budget deficits69
5.3Real stock of money and currency substitution74
5.4Undervaluation and currency substitution82
5.5Undervaluation as a consequence of currency substitution: a simple model90
5.6Other characteristics of hyperinflations92
5.6.1Consequences of high inflation for capital markets92
5.6.2The development of prices95
5.7Economic activity and unemployment101
5.8The political economy of high inflation104
5.9Social and political consequences of hyperinflation107
5.10Conclusions110
6Currency competition, inflation, Gresham's Law and exchange rate114
6.1Introduction114
6.2Empirical evidence for periods one to three116
6.3The model118
6.4First period: introduction of paper money121
6.5Second period: fixed exchange rate and loss of official reserves122
6.6Third period: Gresham's Law at work123
6.7Fourth Period: The return of good money126
6.8Conclusions131
7Ending mild or moderate inflations135
7.1Conditions favouring the stabilisation of moderate inflation135
7.2Restoration of stable monetary constitutions after wars at the old parity136
7.3Preconditions for returning to a stable monetary regime at a new parity138
7.4Further discussion of historical examples146
7.5More recent historical examples151
7.6Conclusions157
8Currency reforms ending hyperinflations160
8.1Introduction160
8.2Political-economic preconditions for initiating successful reforms162
8.3Sufficient economic and institutional conditions for successful currency reforms163
8.4Characteristics of most successful currency reforms: empirical evidence166
8.5Less and least successful reforms175
8.6The influence of wrong evaluations of reform packages by the public189
8.7Conclusions193
AppendixSources for historical data not identified in the text and literature relating to different cases of hyperinflation197
Index207

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