Optimal divisibility of money when money is costly to produce

Manjong Lee, Neil Wallace

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)


There is wide agreement that currency was not available in conveniently small denominations prior to the 19th century. Here, estimates of the costs of providing and maintaining money (coins) in 15th century Europe and parameterized versions of a matching model of money are used to find the optimal degree of divisibility. Although the optima are sensitive to the specification of the matching model, the optimal sizes we find agree in order of magnitude with the sizes of the most common coins in 15th century Europe.

Original languageEnglish
Pages (from-to)541-556
Number of pages16
JournalReview of Economic Dynamics
Issue number3
Publication statusPublished - 2006 Jul

Bibliographical note

Copyright 2011 Elsevier B.V., All rights reserved.


  • Coinage in the fifteenth century
  • Divisibility of currency
  • Matching model

ASJC Scopus subject areas

  • Economics and Econometrics


Dive into the research topics of 'Optimal divisibility of money when money is costly to produce'. Together they form a unique fingerprint.

Cite this