NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Continental Dollar: Initial Design, Ideal Performance, and the Credibility of Congressional Commitment

Farley Grubb

NBER Working Paper No. 17276
Issued in August 2011
NBER Program(s):   DAE

An alternative history of the Continental dollar is constructed from original sources and tested against evidence on prices and exchange rates. The Continental dollar was a zero-interest bearer bond, not a pure fiat currency. The public was promised redemption at face value in specie at fixed future dates. When time-discounting (rational bond pricing) is separated from depreciation, little depreciation occurred before 1779. In 1779, and again in 1780, Congress passed ex post facto laws altering Continental-dollar maturity dates. Because these new dates were not fiscally feasible, Congress’ commitment to the Continental dollar lost credibility. Depreciation and collapse followed shortly thereafter.

download in pdf format
   (945 K)

email paper

This paper is available as PDF (945 K) or via email.

This paper was revised on February 27, 2013

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w17276

Users who downloaded this paper also downloaded these:
Rogoff w7265 International Institutions for Reducing Global Financial Instability
Cook and Devereux w17131 Sharing the Burden: Monetary and Fiscal Responses to a World Liquidity Trap
Grubb w13770 The Continental Dollar: What Happened to It after 1779?
Grubb w17209 State Redemption of the Continental Dollar, 1779-1790
Grubb w13047 The Continental Dollar: How Much Was Really Issued?
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

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

Contact Us