François Velde's Web Page

Welcome to my Economics home page.

Explanation

I officially have a home page at the Chicago Fed, where you can find my mugshot and a potted bio. However, I don't control its contents, have no access to it, and do not know long that state of affairs will last.

Work in Progress

The Life and Times of Nicolas Dutot

Chronicles of a Deflation Unforetold

Believe it or not, this is a real experiment, carried out in France in 1724. To find out what did happen to prices and output, read the paper (earlier version of Nov 2006). If that's too much work, you can always glance at the slides (earlier version).

State-Space Approach to Inflation Measurement and Forecasting

See my article in Economic Perspectives for the basic idea and some results.

Pennies and Nickels: A Medieval Solution to a Medieval Problem

Pennies and nickels are threatened: their intrinsic content is higher than their face value, and the US Mint has made it illegal to melt them down.

I discuss the problem and propose a solution in this FedLetter.

The idea has received some attention (Yahoo News Jan 24, Milwaukee Journal Sentinel Jan 25, Pittsburgh Post-Gazette Jan 29, column by Austan Goolsbee in the New york Times Feb 2, London Times Feb 16, Cincinnati Inquirer Feb 24; radio and TV interviews).

this site tells you each day the intrinsic value of US coins.

John Law

John Law (1671-1729) was a Scots economist who managed to get his hands on the French economy and try out innovative ideas, like replacing commodity money with fiat money and replacing government debt with government equity. After a euphoric peak, things turned sour pretty fast, and the episode is known as the "Mississipi Bubble".

The episode has been discussed before, with surprisingly little attention given to basic questions. This work is a biography of John Law's construct, the so-called "System", rather than yet another biography of Law.

Manuscript

Download the manuscript (Nov 2004 version; about 3.3Mb).

This manuscript is work-in-progress and still incomplete. It is distributed for comments only.

What started as a paper is now turning into a book, and I am not updating the "paper" version below.

Download the paper (May 2004 version).

Data

Here are Excel 97 files containing the data I've collected and used for the paper. These are not yet cleaned up and fully annotated. If you have questions, drop me a line (May 2004).

• john_law.xls (2.9Mb)
  contains the following sheets:
  • foreign exchange: foreign exchange quotations, London on Paris (1717-22) and Paris on London (1717-20)
  • FX par: calculations of par with London and Amsterdam
  • livre (gold) and livre (silver): coin specifications and mint prices for gold and silver coinage (1666-1789)
  • Giraudeau: all the prices for the System's instruments from Giraudeau's manuscript (with variants from different mss)
  • Buvat: other quotations from contemporary sources
  • calendar: quotations in column format (with a calendar indicating sundays and holidays)
  • billets: numbers of notes printed, burned, retired, by denomination
  • billets 2: calculations on what became of the notes
  • billets 3: "bilan de la caisse generalle de la Banque"
  • visa: figures on the Visa
  • Hamilton: price data from Earl Hamilton
• finances.xls (0.5Mb)
  contains data on French revenues and expenditures, 1661-1715 (from Mallet, Forbonnais, Boislisle). Almost all comes from the ESFDB but I've had to do a fair amount of work to compare and reconcile the sources
• finances2.xls (0.2Mb)
  contains data on French revenues and expenditures, 1716-1725 (from archival sources: BN, AN)

The graphs in the paper are generated with Matlab files, available upon request.

What next?

...

The Big Problem of Small Change

Co-authored with Thomas Sargent, this award-winning book published in 2002 by Princeton University Press is now available in paperback.

• by David Warsh in the Boston Globe, Jan. 1, 2002, p. C1 (here)
• in the Economist Jan 26, 2002, vol. 362 issue 8257, p. 66 (here)
• by Paul Podolsky in the Wall Street Journal April 2, 2002, Vol. 239 Issue 64, p. A20
• by "David Ricardo" in the American Spectator, Mar/Apr 2002, 35(2):79.
• by Anna J. Schwartz on Eh.Net, July 2002 (here)
• by J. Murdock in Choice Jul/Aug 2002, 39(11/12):2008.
• by Leland B. Yeager in the Cato Journal Spring/Summer 2002, 22(1):188 (here)
• by José I. García de Paso in Revista de Historia Económica 2002, 20(2)
• by Kent Matthews in the Economic History Review Nov 2002, 55(4):775--76 (here)
• by Harold James in the Times Literary Supplement Dec. 13, 2002
• by Arthur J. Rolnick and Warren E. Weber in the Journal of Political Economy Apr 2003, 111(2):459--63 (here); reprinted in the Region (Federal Reserve Bank of Minneapolis) Jun 2003, 17(2):44--48
• by Christine Wiskin in Business History Apr 2003, 45(2):134--35
• by Angela Redish in Economic Record Jun 2003, 79(245):268
• by Neil Wallace in the Journal of Monetary Economics Sep 2003, 50(6):1391-1401
• by Muharem Kianieff in the Banking and Finance Law Review Oct 2003, 19(1):129-134
• by Angela Redish in the Journal of Economic Literature Dec 2003, 41(4):1318 (here)
• by Yoshiaki Sikano in Economic Review 2004, 55(1):86-88
• by Kevin Hoover in the Journal of the History of Economic Thought Sept. 2004, 26(3):426-428 (here)
• by Isabel Schnabel in the Financial History Review Oct 2005, 12(2):311-323.
• by Akinobu Kuroda in the International Journal of Asian Studies 2005, 2(1):179-181.
• by Pascal Bridel in Economica Aug 2006, 73(291):547-548.