TU Darmstadt / ULB / TUbiblio

On ‘Rusting’ Money Silvio Gesell’s Schwundgeld Reconsidered

Rehme, Günther (2018):
On ‘Rusting’ Money Silvio Gesell’s Schwundgeld Reconsidered.
Darmstdt, In: Darmstadt Discussion Papers in Economics, ISSN 1438-2733, [Online-Edition: http://tuprints.ulb.tu-darmstadt.de/7538],
[Report]

Abstract

Silvio Gesell hypothesized that money depreciation is economically and socially beneficial, ideas that have often been contended. Here I analyze that in a Sidrauski model in which households additionally have a ‘love of wealth’-motive. It is shown Gesell’s claims may be valid in a demand-determined, short-run equilib- rium and why money depreciation overcomes the zero lower bound on nominal interest rates. However, for a typical long-run equilibrium introducing money de- preciation in isolation may be bad. But money depreciation, when coupled with expansionary monetary policy, is a necessary condition for a positive Mundell- Tobin effect on long-run real variables and so creates wealth in the model. It is found that this also holds in the transition to the long-run equilibrium. Hence, the spirit of Gesell’s hypotheses can be verified for a plausible, long-run environment.

Item Type: Report
Erschienen: 2018
Creators: Rehme, Günther
Title: On ‘Rusting’ Money Silvio Gesell’s Schwundgeld Reconsidered
Language: English
Abstract:

Silvio Gesell hypothesized that money depreciation is economically and socially beneficial, ideas that have often been contended. Here I analyze that in a Sidrauski model in which households additionally have a ‘love of wealth’-motive. It is shown Gesell’s claims may be valid in a demand-determined, short-run equilib- rium and why money depreciation overcomes the zero lower bound on nominal interest rates. However, for a typical long-run equilibrium introducing money de- preciation in isolation may be bad. But money depreciation, when coupled with expansionary monetary policy, is a necessary condition for a positive Mundell- Tobin effect on long-run real variables and so creates wealth in the model. It is found that this also holds in the transition to the long-run equilibrium. Hence, the spirit of Gesell’s hypotheses can be verified for a plausible, long-run environment.

Series Name: Darmstadt Discussion Papers in Economics
Volume: 233
Place of Publication: Darmstdt
Divisions: 01 Department of Law and Economics
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete > Economic Theory
Date Deposited: 15 Jul 2018 19:57
Official URL: http://tuprints.ulb.tu-darmstadt.de/7538
URN: urn:nbn:de:tuda-tuprints-75388
Additional Information:

Economic Performance, Depreciating Money, Zero Lower Bound, Demonetization, Love of Wealth

Export:

Optionen (nur für Redakteure)

View Item View Item