On "rusting" money: Silvio Gesell's Schwundgeld reconsidered

Arbeitspapier

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 equilibrium and why money depreciation overcomes the zero lower bound on nominal interest rates. However, for a typical long-run equilibrium introducing money depreciation 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Darmstadt Discussion Papers in Economics ; No. 233

Classification and Topics

• Classification: Wirtschaft
• Subject: Economic Performance ; Depreciating Money ; Zero Lower Bound ; Demonetization ; Love of Wealth

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rehme, Günther
• Event: Veröffentlichung
• (who): Technische Universität Darmstadt, Department of Law and Economics
• (where): Darmstadt
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/180662
• URN: urn:nbn:de:tuda-tuprints-75388
• Last update: 10.03.2025, 11:44 AM CET