Yesterday, I received news that my paper with Bryan Cutsinger and Mathieu Bédard on the strange monetary experiment of playing card money in New France had been accepted at the European Review of Economic History. In the 1680s, the French colony began issuing money on the back of playing cards. However, the experiment did not lead to inflation for many years in spite of large issues. Bryan, Mathieu and I explain why that is the case. Essentially, it is a macroeconomic narrative of one the strangest monetary experiment we ever saw. In the process, it offers great insights on the debate between the quantity theory of the price level and the fiscal theory of the price level. The abstract for the paper is below, the SSRN link is here and I should note that I have another paper related to this experiment with paper money but this time (in collaboration with Gabriel Mathy) we explore the effects of playing card money on economic growth:
During the colonial era, the French colonial government in Canada experimented with paper money printed on the back of playing cards. The first experiment lasted from 1685 to 1719. In the first years, there was little inflation in spite of a rapidly expanding stock of playing card money. It is only in the later years of the experiment that prices rose. The behavior of the money stock and nominal output suggest that velocity fluctuated throughout the period. We argue here that these fluctuations can be explained by variations in the enforcement of legal tender laws. This interpretation provides insights into the debate over the inflationary impact of paper money in the colonial United States.