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Asymmetric Information and Commodity Money: Tickling the Tolerance in Medieval France

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  • Gandal, Neil
  • Sussman, Nathan

Abstract

An important development in Europe was the emergence of nationally circulating commodity money. Asymmetric information between coin producers and users provided rulers with an opportunity to supply a public good: standard universally accepted coins. The authors describe the development of a sophisticated monetary system (bureaucracy) in medieval France. In the monitoring, scheme employed by the crown, fines were levied against private mint masters when coins did not meet the standards. Yet, fineness or quality of the coin was measured in a way favorable to the mint master. The show that this method implicitly encouraged the mint masters to produce low quality coins in such a way that the crown earned rents and we measure these rents. Copyright 1997 by Ohio State University Press.

Suggested Citation

  • Gandal, Neil & Sussman, Nathan, 1997. "Asymmetric Information and Commodity Money: Tickling the Tolerance in Medieval France," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(4), pages 440-457, November.
    • Handle: RePEc:mcb:jmoncb:v:29:y:1997:i:4:p:440-57
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    Citations

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    Cited by:

    1. Volckart, Oliver, 2008. "‘The big problem of the petty coins’, and how it could be solved in the late Middle Ages," Economic History Working Papers 22310, London School of Economics and Political Science, Department of Economic History.
    2. John H. Munro, 2009. "Coinage and Monetary Policies in Burgundian Flanders during the late-medieval 'Bullion Famines',. 1384 - 1482," Working Papers tecipa-361, University of Toronto, Department of Economics.
    3. Ling-Fan Li, 2015. "Information asymmetry and the speed of adjustment: debasements in the mid-sixteenth century," Economic History Review, Economic History Society, vol. 68(4), pages 1203-1225, November.
    4. Li, Ling-Fan, 2009. "After the Great Debasement, 1544-51: did Gresham’s Law apply?," Economic History Working Papers 27874, London School of Economics and Political Science, Department of Economic History.
    5. Richard Dutu & Ed Nosal & Guillaume Rocheteau, 2005. "On the recognizability of money," Working Papers (Old Series) 0512, Federal Reserve Bank of Cleveland.
    6. Stephen Quinn & William Roberds, 2014. "The Bank of Amsterdam Through the Lens of Monetary Competition," Financial and Monetary Policy Studies, in: Peter Bernholz & Roland Vaubel (ed.), Explaining Monetary and Financial Innovation, edition 127, pages 283-300, Springer.
    7. Bignon, Vincent & Dutu, Richard, 2017. "Coin Assaying And Commodity Money," Macroeconomic Dynamics, Cambridge University Press, vol. 21(6), pages 1305-1335, September.
    8. Vincent Bignon & Richard Dutu, 2006. "Moneychangers and Commodity Money," EconomiX Working Papers 2006-9, University of Paris Nanterre, EconomiX.
    9. Sussman, Nathan & Zeira, Joseph, 2003. "Commodity money inflation: theory and evidence from France in 1350-1436," Journal of Monetary Economics, Elsevier, vol. 50(8), pages 1769-1793, November.
    10. John H. Munro, 2012. "The Technology and Economics of Coinage Debasements in Medieval and Early Modern Europe: with special reference to the Low Countries and England," Working Papers tecipa-456, University of Toronto, Department of Economics.
    11. Gary B. Gorton, 2016. "The History and Economics of Safe Assets," NBER Working Papers 22210, National Bureau of Economic Research, Inc.
    12. Isabel Schnabel & Hyun Song Shin, 2018. "Money and trust: lessons from the 1620s for money in the digital age," BIS Working Papers 698, Bank for International Settlements.

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