Seigniorage

In the Dutch Republic, the nobility of the county Holland steadily declined in numbers, until by 1795 as few as six families were left. As nobles held an overwhelming majority (80 percent) of Holland’s seigneuries at the beginning of the Dutch Revolt, this raises the question which families became the new owners during the seventeenth and eighteenth century. Although studies in this feld have made frequent use of data regarding ownership of seigneuries, comprehensive research was lacking
until now.
This article is based on data collection targeting all of Holland’s seigneuries between 1500 and 1795. It argues that by 1795 Holland’s seigneurs had evolved into a diverse group consisting of regents, nobles, merchants, wealthy citizens, offce holders as well as local administrators. The regent class gradually emerged as the largest group, surpassing the nobles around 1720. Studies based on research in Gouda, Hoorn and Leiden have tended to play down the patrician share. However, regents holding seigneuries can be found especially in Amsterdam, Rotterdam and Dordrecht. As the total number of Holland’s regents greatly exceeded the number of lordships, titled regents naturally remained a minority among their colleagues. Still, members of the bourgeois ruling elite owning seigneuries was not as unusual a phenomenon as has been suggested so far.

Governments through the ages have appropriated real resources through the monopoly of the ‘coinage’. In modern fiat money economies, the monopoly of the issue of legal tender is generally
assigned to an agency of the state, the Central Bank, which may have varying degrees of operational and target independence from the government of the day.

In this paper I analyse four different but related concepts, each of which highlights some aspect of the way in which the state acquires command over real resources through its ability to issue fiat money.

They are (1) seigniorage (the change in the monetary base), (2) Central Bank revenue (the interest bill saved by the authorities on the outstanding stock of base money liabilities), (3) the inflation tax (the reduction in the real value of the stock of base money due to inflation and (4) the operating profits of the central bank, or the taxes paid by the Central Bank to the Treasury.

To understand the relationship between these four concepts, an explicitly intertemporal approach is required, which focuses on the present discounted value of the current and future resource transfers between the private sector and the state. Furthermore, when the Central Bank is operationally independent, it is essential to decompose the familiar consolidated ‘government budget constraint’ and consolidated ‘government intertemporal budget constraint’ into the separate accounts and budget constraints of the Central Bank and the Treasury. Only by doing this can we appreciate the financial constraints on the Central Bank’s ability to pursue and achieve an inflation target, and the importance of cooperation and coordination between the Treasury and the Central Bank when faced with financial sector crises involving the need for long-term recapitalisation or when confronted with the need to mimick Milton Friedman’s helicopter drop of money in an economy faced with a liquidity trap.

JEL: E4, E5, E6, H6
Keywords: inflation tax, central bank budget constraint, coordination of monetary and fiscal policy

MONETA E POTERE: viaggio a Guardiagrele, paese dell’utopia

Lo scritto vuol far luce su quali siano le implicazioni tra la moneta, i suoi intoccabili padroni e il popolo assoggettato al suo onnipervasivo potere.
Lo scritto vuol far luce altresì sulla figura di Giacinto Auriti, quale prima persona al mondo in grado di rispondere alla domanda "di chi sono i soldi che abbiamo in tasca?".
Ognuno li adopera, ma in pochi sanno realmente cosa sono, a cosa servano e come si origini il valore che incorporano.
Buona lettura.

Renovatio Monetae, is a Latin expression that means re-coinage, where old coins were declared invalid and exchanged for new ones. Re-coinage generated important revenues for the medieval coin issuers and could occur as often as twice a year. An exchange fee was charged to tax trade and inhabitants. A common theme in this book is that medieval bracteates, thin uni-faced coins, are strongly connected to such re-coinage in the High Middle Ages. The bracteates had several characteristics that made them suitable as short-lived coinage, e.g. low production costs and a large diameter, which made it possible to vary the main design of the coins.

Roger Svensson works as Associate Professor in economics at the Research Institute of Industrial Economics (IFN) in Stockholm. He shows that the system with short-lived coinage and bracteates was dominant in currency areas with a low monetization. Such areas could be found in the central, northern and eastern parts of medieval Europe. The book is partly a summary of the existing research literature about bracteates, but the author also contributes with own analysis in several respects – specifically when creating an economic theory about short-lived coins and medieval bracteates.

Zimbabwe has recently experienced record hyperinflation of 80 billion percent a month. This paper uses new data from Zimbabwe to investigate money demand under hyperinflation using an autoregressive distributed-lag model for the period 1980-2008. The results produce plausible convergence rates and long-run elasticities, indicating that real money balances are cointegrated with the inflation rate signifying an equilibrium relationship between the two series. Evidence is also presented that suggests prices are being driven by increases in the money supply rather than by changes in price setting behaviour. The paper additionally uses the estimated elasticity on the inflation variable to calculate the maximum level of seigniorage revenue that could be raised in the economy. Actual seigniorage levels increased dramatically after 2000, with inflation eventually exceeding the rate required to maximize this revenue stream. This is discussed in relation to international nancing constraints and the collapse of the domestic tax base.

Апстракт: У раду су анализиране геофизичке карактеристике студеничких и жичких поседа, у време Саве Немањића. Прилози (насеља, обрадиве и необрадиве површине) су били груписани у неспосредном окружењу манастирских цркава, али и удаљеним крајевима. Геофизички и геолошки фактори су утицали, између осталог, на избор локације за подизање манастира у средњем веку, те врсту и карактер дарованих прилога. Надаље, свакодневни живот човека и основне привредне делатности, проматрају се у контексту особености простора.

Re-coinage implies that old coins are declared invalid and exchanged for new ones at fixed exchange rates and dates. Empirical evidence shows that re-coinage could occur as often as twice a year within a currency area in the Middle Ages. The exchange fee at re-coinage worked as a monetary tax for trade and inhabitants. The main purpose here is to set up a simple theory about short-lived coins, which has not been done before. It turns out that re-coinage works particularly well in relatively undeveloped economies. Such economies had a small volume of coins in circulation, which facilitates both re-minting and monitoring of a short-lived coinage system. Re-coinage had both positive and negative overlapping consequences: 1) a stable coinage with respect to weight and fineness, and no long-term inflation; 2) short-term disturbances in the velocity of money, price-levels and the volume of transactions; 3) the coins' function as a store of value deteriorated; and 4) inhibitions on trade, business and the division of labor. Debasement was the alternative method for collecting a monetary tax. It was less restrictive and had lower administrative costs for the coin issuer than re-coinage. Besides low monetization, the strong position of ecclesiastical coin issuers, who disliked manipulations of weights and fineness, was likely a factor in why re-coinage was preferred to debasement. However, the costs for society as a whole could be higher for secret debasements than routine calendar driven re-coinage, due to the high uncertainty.

Archaeology and numismatics have long been familiar with the phenomenon of periodic re-coinage (renovatio monetae), which dominated monetary taxation in medieval Europe for almost 200 years. However, this form of monetary taxation is seldom, if ever, discussed in the literature of economics or economic history. No economic theory has ever been proposed to explain periodic re-coinage. The present study aims to make up for this absence. It examines the qualities that typically differentiate regions with periodic re-coinage from those with other monetary systems and analyzes how periodic re-coinage was monitored and enforced. The principal example of frequently renewed coins is uni-faced bracteates, which were often subject to annual or even biannual re-coinages. Although bracteates were not the cause of periodic re-coinage, their features facilitated frequent renewals. The study discusses the economic consequences of periodic re-coinage and links the breakdown of this monetary system with the end of bracteates' role as the principal coin in the 14th century.

Penerimaan dari Pencetakan Uang (Seigniorage), Inflasi dan Tingkat Bunga
Disusun oleh: Muhammad Rafi Kambara
Penerimaan yang ditingkatkan melalui pencetakan uang disebut seigniorage. Peningkatan jumlah uang beredar akan menyebabkan inflasi, namun inflasi ini meningkatkan penerimaan bagi pemerintah seakan menetapkan pajak inflasi.
Tingkat bunga adalah harga yang dibayarkan untuk satuan mata uang yang dipinjam pada periode waktu tertentu.

A specific monetary tax − called periodic re-coinage − was applied for almost 200 years in large parts of medieval Europe. Old coins were frequently declared invalid and exchanged for new ones based on publicly announced dates and exchange fees. A theoretical framework of how periodic re-coinage works in practice is tested on Swedish coinage. The theory suggests that economic backwardness, limited monetisation of society and separate currency areas facilitated re-coinage. The Swedish experience is extraordinarily consistent with this theory. It is shown that Sweden adopted coin types similar to those minted in Continental Europe during the Middle Ages and the corresponding coinage and monetary taxation policies. Periodic re-coinage was applied with varying frequency from 1180 to 1290. However, monetisation increased in the late thirteenth century, making periodic re-coinage more difficult, and long-lived coins were introduced in 1290. With the end of periodic re-coinage, Swedish kings accelerated the debasement of long-lived coins, which continued until the beginning of the sixteenth century.

While most economists agree that seigniorage is one way governments finance deficits, there is less agreement about the political, institutional and economic reasons for relying on it. This paper investigates the main political and institutional determinants of seigniorage using panel data on about 100 countries, for the period 1960-1999. Estimates show that greater political instability leads to higher seigniorage, especially in developing, less democratic and socially-polarized countries, with high inflation, low access to domestic and external debt financing and with higher turnover of central bank presidents. One important policy implication of this study is the need to develop institutions conducive to greater political stability as a means to reduce the reliance on seigniorage financing of public deficits.

This paper revisits the empirical relationship between political stability and inflation while explicitly accounting for the presence of the shadow economy. Using a large data set of 122 countries over the 1999 to 2007 period, we find that the well established negative correlation between political stability and inflation holds only if the size of the shadow economy remains modest; and it ceases to exist at higher levels of the size of the informal sector. This finding contributes to the existing literature on public finance that assigns special importance to political determinants of inflation. The results are robust against alternative specifications and satisfy the usual assumptions of a valid statistical inference. JEL classification codes: O17, E52, H26, H27

This paper reviews how a central bank’s involvement in activities such as foreign exchange intervention and restructuring banking systems at the behest of the government may affect its balance sheet and the possible implications. If such operations leave the central bank with low, or even negative, capital its (perceived) independence and ability to conduct monetary policy may be affected.

We consider a NK-DSGE model with distortive taxation and heterogeneous agents, modeled using a modified version of the mechanism proposed by Bilbiie, Monacellli and Perotti (2012). We study the dynamics of the model in response to five shocks, under three different assumptions on the labor income tax rates: a) equal taxes, both agents face the same labor income tax rate; b) partial redistribution, both agents pay a tax but the tax rate on borrower labor income is lower than the tax rate on saver labor income; c) full redistribution, saver labor income is taxed while borrower labor income is subsidized at the same rate. In the analysis of expansionary fiscal policy, public debt increases more in a context of partial redistribution than in a context of full redistribution, due to the internalization of government budget constraint by savers. In addition, a negative saver tax shock has a negative impact on redistribution, which is exacerbated under partial redistribution. Finally, a ne...

The seigneurial-episcopal power was an important mechanism used in the negotiating relations between ecclesiastical and secular powers during the Middle Ages. Specifically, between the eleventh and thirteenth centuries it is possible to observe that the policy undertaken by the Roman Church and even the most distant European bishops was based on applying this type of power as a fundamental weight in the balance of tensions that characterized the search for equilibrium between medieval Churches and Monarchies. More than disputes over prominent positions in what historiography has long considered as a manifestation of the intent of centralization of political and institutional power, what we find in our research is a quotidian of comings and goings, agreements and disagreements that reaffirm the character that decentralization has not always meant-or means-a break in the recognition of authority, whether ecclesiastical or monarchical. What we will demonstrate in this article is how much the seigneurial-episcopal power was important during the negotiations between the episcopates of Santiago de Compostela and Sigüenza with the Castilian-Leonese monarchy in the twelfth century.

UM ESTUDO COMPARATIVO DO PODER SENHORIAL-EPISCOPAL EM CASTELA E LEÃO NO SÉCULO XII
Resumo: O poder senhorial-episcopal foi um importante mecanismo utilizado nas relações de negociação entre os poderes eclesiástico e laico no decorrer da Idade Média. Especificamente, entre os séculos XI a XIII, é possível observar que a política empreendida pela Igreja de Roma e até pelos mais longínquos bispados europeus fundamentava-se em aplicar esse tipo de poder como um peso fundamental na balança de tensionamentos que caracterizou a busca por equilíbrio entre Igrejas e Monarquias medievais. Mais do que disputas por posicionamentos de proeminência naquilo que a historiografia considerou durante muito tempo como uma manifestação de pretensão de centralização do poder político e institucional, o que verificamos em nossas pesquisas é um cotidiano de idas e vindas, acordos e desacordos que reafirmam o caráter de que nem sempre a descentralização significou – ou significa – quebra de reconhecimento da autoridade, fosse eclesiástica ou monárquica. O que demonstraremos neste artigo, é o quanto o poder senhorial-episcopal foi importante durante as negociações entre os episcopados de Santiago de Compostela e Sigüenza com a monarquia castelhano-leonesa no século XII.
Palavras-chave: Poder senhorial-episcopal; Monarquia; Século XII

Optimal government finance models illustrating trade-offs between different policy instruments, such as seigniorage and income taxes, have focused on industrialized countries. In this paper, a model that includes the effective reserve ratio and currency growth rate as instruments is derived from a welfare loss function and is estimated using fixed effects for a sample of 29 developing countries. The results indicate that the governments in the sample use the reserve requirement to minimize the welfare losses associated with seigniorage revenue. Mid-level democracies are associated with the highest effective reserve ratios.

Optimal government finance models illustrating trade-offs between different policy instruments, such as seigniorage and income taxes, have focused on industrialized countries. In this paper, a model that includes the effective reserve ratio and currency growth rate as instruments is derived from a welfare loss function and is estimated using fixed effects for a sample of 29 developing countries. The results indicate that the governments in the sample use the reserve requirement to minimize the welfare losses associated with seigniorage revenue. Mid-level democracies are associated with the highest effective reserve ratios.