Abstract:A Fisher's Identity model is established to study Northern Song China's (960-1126) level of velocity of money using money supply and gross domestic product (GDP) data. Results of the exercise help rationalize what is called the "bronze coin" puzzle, which is the massive amount of minted coins seemingly incommensurate with price levels. It is shown that the velocity of money was increasing and comparable to preindustrial England levels. This paper argues that the driving forces of the short supply of money are … Show more
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