2020

Renovatio Monetae: When Gesell Taxes Worked

Reprint No. 2020:37

Author(s): Roger Svensson and Andreas WestermarkYear: 2020 Title: International Economic Review Volume (No.): 61 (2) Pages: 821–846
Online article (restrictions may apply)
Preliminary version


Gesell taxes on money have recently received attention as a way of alleviating the zero lower bound on interest rates. Less known is that such taxes generated seigniorage in medieval Europe for around two centuries. When a Gesell tax was levied, current coins ceased to be legal and had to be exchanged into new coins for a fee. Using a cash‐in‐advance model, we analyze under what conditions agents exchange coins and the tax generates revenues. A low exchange fee, high punishments for using old coins, and a long time period between re‐mintings induce people to use new coins.


Reference:
Svensson, Roger and Andreas Westermark (2020), "Renovatio Monetae: When Gesell Taxes Worked". International Economic Review 61(2), 821–846.

Roger Svensson

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Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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