America's first monetary policy: inflation and seigniorage during the Revolutionary War

Abstract This examination of America's original monetary policy as implemented by the Continental Congress during the Revolutionary War finds that the extreme inflation experienced during the war resulted from a policy designed to circumvent a free-rider problem institutionalised by the Articles of Confederation, and that war news played a critical role in the behaviour of the money base over time. Furthermore, despite the extreme inflation, the inflation tax that accrued to Congress remained on the left side of the Laffer curve.