TY  - JOUR
AU  - Rousseau,Peter L.
TI  - Backing, the Quantity Theory, and the Transition to the U.S. Dollar, 1723-1850
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12835
PY  - 2007
Y2  - January 2007
UR  - http://www.nber.org/papers/w12835
L1  - http://www.nber.org/papers/w12835.pdf
N1  - Author contact info:
Peter L. Rousseau
Department of Economics
Vanderbilt University
VU Station B #351819
2301 Vanderbilt Place
Nashville, TN 37235-1819
Tel: 615/343-2466
E-Mail: peter.l.rousseau@vanderbilt.edu
AB  - Among the thirteen original colonies, Pennsylvania was most successful at issuing paper money with only minimal effects on prices -- so much so that the colony's experience is sometimes seen as violating the classical quantity theory of money. Quantity theorists usually attribute this apparent anomaly to mismeasurement of the money stock. In contrast, I use data on money, prices, and real activity in Pennsylvania from 1723 to 1774 and for the United States as a whole from 1790 to 1850 (when the money stock is better measured) to show that the long-run behavior of money and prices is well explained by the quantity theory in both periods, despite the differences in institutional arrangements, once growth in monetized transactions is taken into account.
ER  -