Working Paper: NBER ID: w9230
Authors: Richard C. K. Burdekin; Marc D. Weidenmier
Abstract: Confederate monetary reforms encouraged holders of Treasury notes to exchange these notes for bonds by imposing deadlines on their convertibility. We show that Confederate funding acts aimed at precipitating the conversion of currency into bonds did temporarily suppress currency depreciation. These acts also triggered upsurges in commodity prices, however, as note holders rushed to spend the currency before their exchange rights were reduced. Asset price stabilization policies seem to have increased the velocity of circulation and counterproductively channeled inflationary pressures into other areas of the economy.
Keywords: No keywords provided
JEL Codes: E52; N21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Confederate funding acts aimed at encouraging the conversion of treasury notes into bonds (H63) | temporary suppression of currency depreciation (F31) |
| temporary suppression of currency depreciation (F31) | surges in commodity prices (Q02) |
| Confederate funding acts (H69) | increased velocity of circulation (E41) |
| increased velocity of circulation (E41) | surge of commodity price inflation (E31) |
| initial surges in commodity prices (Q02) | consumption expenditures through gains on bonds exchanged at par (E20) |