NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Two Theories of Money Reconciled: The Colonial Puzzle Revisited with New Evidence

Farley Grubb

NBER Working Paper No. 11784
Issued in November 2005
NBER Program(s):   DAE

The purported failure of the classical quantity theory of money in the colonial economy is shown to be a failure of data and not a failure of theory. When new data on the quantity of specie in circulation is added to the current data on paper money and prices, and econometrically estimated in both short- and long-run monetary models, the long-debated anomaly regarding the performance of the classical quantity theory of money in the colonial economy disappears. How paper money was backed and could be exchanged for specie was important, but not in the way theorists assert.

download in pdf format
   (267 K)

email paper

This paper is available as PDF (267 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w11784

Users who downloaded this paper also downloaded these:
Bordo w1821 Explorations in Monetary History: A Survey of the Literature
McCallum w3383 Money and Prices in Colonial America: A New Test of Competing Theories
Bordo and Schwartz w9713 IS-LM and Monetarism
Rousseau w12835 Backing, the Quantity Theory, and the Transition to the U.S. Dollar, 1723-1850
Gordon and Leeper w9084 The Price Level, the Quantity Theory of Money, and the Fiscal Theory of the Price Level
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us