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Commodity and Token Monies

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  • Thomas J Sargent

Abstract

A government defines a dollar as a list of quantities of one or more precious metals. If issued in limited amounts, token money is a perfect substitute for precious metal money. Atemporal equilibrium conditions determine how quantities of precious metals and token monies affect an equilibrium price level. Within limits, a government can peg the relative price of two precious metals, confirming Fisher's (1911) response to a classic criticism of bimetallism. Monometallism dominates bimetallism according to a natural welfare criterion.

Suggested Citation

  • Thomas J Sargent, 2019. "Commodity and Token Monies," The Economic Journal, Royal Economic Society, vol. 129(619), pages 1457-1476.
    • Handle: RePEc:oup:econjl:v:129:y:2019:i:619:p:1457-1476.
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    File URL: http://hdl.handle.net/10.1111/ecoj.12587
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    Cited by:

    1. Costabile, Lilia, 2022. "Commodity money, natural values, and central banking in Ricardo," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 104-111.
    2. Fernández-Villaverde, Jesús & Sanches, Daniel, 2023. "A model of the gold standard," Journal of Economic Theory, Elsevier, vol. 214(C).
    3. Jesús Fernández-Villaverde & Daniel R. Sanches, 2024. "Price-Level Determination Under the Gold Standard," Working Papers 24-06, Federal Reserve Bank of Philadelphia.

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