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On ‘Rusting’ Money Silvio Gesell’s Schwundgeld Reconsidered

Rehme, Günther (2018):
On ‘Rusting’ Money Silvio Gesell’s Schwundgeld Reconsidered.
In: Darmstadt Discussion Papers in Economics, 233, Darmstdt, ISSN 1438-2733,

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Item Type: Report
Title: On ‘Rusting’ Money Silvio Gesell’s Schwundgeld Reconsidered
Language: English

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: Darmstadt Discussion Papers in Economics
Series Volume: 233
Place of Publication: Darmstdt
Classification DDC: 300 Sozialwissenschaften > 330 Wirtschaft
Divisions: 01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete > Economic Theory
Date Deposited: 10 Jul 2018 07:21
Last Modified: 09 Jul 2020 02:09
URN: urn:nbn:de:tuda-tuprints-75388
Additional Information:

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

URI: https://tuprints.ulb.tu-darmstadt.de/id/eprint/7538
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