Colonial North Carolina's paper money regime, 1712-1774: value decomposition and performance

摘要

North Carolina's colonial assembly emitted its own paper money and maintained some amount in public circulation during its entire history as a separate colony. No systematic or statistical analysis of North Carolina's paper money regime exits in the literature. We correct that here. We model and estimate how the market value of this money was determined. We compare the quantity theory of money with an asset-pricing model to see which explains the observed market value of the paper money better. Finally, we explore counterfactual redemption architectures to show how redemption affected monetary performance in periods of value collapse.