Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129644
Authors: 
Svensson, Roger
Westermark, Andreas
Year of Publication: 
2015
Series/Report no.: 
IFN Working Paper 1083
Abstract: 
Gesell taxes on money holdings have received attention in recent decades as a way of alleviating the zero lower bound on interest rates. Less known is that such a tax was the predominant method used to generate seigniorage in large parts of medieval Europe for around two centuries. When the Gesell tax was levied, current coins ceased to be legal tender and had to be exchanged into new coins for a fee - an institution known as renovatio monetae or periodic re-coinage. This could occur as often as twice a year. Using a cash-in-advance model, prices increase over time during an issue period and falls immediately after the re-coinage date. Agents remint coins and the system generates tax revenues if the tax is sufficiently low, if the time period between re-coinages is sufficiently long, and if the probability of being penalized for using illegal coins is sufficiently high.
Subjects: 
Seigniorage
Gesell tax
periodic re-coinage
cash-in-advance model
JEL: 
E31
E42
E52
N13
Document Type: 
Working Paper

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