Q ED Queen’s Economics Department Working Paper No. 1313 Mining Gold for the Currency during the Pax Romana John Hartwick Queen’s University Department of Economics Queen’s University 94 University Avenue Kingston, Ontario, Canada K7L 3N6 8-2013 Mining Gold for the Currency during the Pax Romana John M. Hartwick
[email protected] Abstract We set out a simple four sector macro model of the economy of the Roman Empire during a period of considerable economic prosperity. Our focus is on gold coins as currency and the seignor- age which the government used to fund its activities. We solve numerically for a balanced growth representation of the economy of the empire, a solution that captures the intricacies of money creation, currency expansion and seignorage. We subscribe to the view that the exhaustion of low-cost gold and silver deposits contributed signi…cantly to the ending of the economic prosper- ity enjoyed by Roman Italy and its provinces during the so-called Pax Romana (31 BC to 165 CE) and we attempt to capture sig- ni…cant shifts in variables during the decline. JEL Classi…cation: E40; E10; N10 Key words: Roman money supply; gold coinage; money during Pax Romana 1 Introduction We are interested in a nation …nancing part or all of its public sector with seignorage. Seignorage is a surplus associated with the issuing of a new batch of currency: the purchasing value or capacity of the new currency less the cost of manufacturing the new currency.1 We set out Peter Temin commented on an earlier draft based on a two region model and inspired me to reformulate matters as is done below.