Working Paper No. 1083

Renovatio Monetae: Gesell Taxes in Practice

Published: September 8, 2015Pages: 53Keywords: Seigniorage; Gesell tax; Periodic re-coinage: Cash-in-advance modelJEL-codes: E31; E42; E52; N13

Renovatio Monetae: Gesell Taxes in Practice Roger Svensson and Andreas Westermark

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 su¢ ciently low, if the time period between re-coinages is su¢ ciently long, and if the probability of being penalized for using illegal coins is su¢ ciently high.

Roger Svensson


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In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?


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