No. 85. ANOTHER VIEW ON AN OLD INFLATION: ENVIRONMENT AND POLICIES IN THE ROMAN EMPIRE UP TO DIOCLETIAN’S PRICE EDICT
P.I. Prodromídis. 2006.
The paper deals with the origins of one of the earliest recorded inflations, which occurred in the Roman Empire. The received wisdom is that attested government deficits in the course of the first three centuries A.D., led to successive increases in the money supply, facilitated by continuous debasements of the silver currency, up to the reign of Diocletian (284-305). The latter attempted to restore trust to the coinage by issuing gold and silver coins of good quality. However, he also minted significant quantities of bronze coins in order to finance the restoration, re-form, and preservation of the Empire. Thus, he further increased the money supply. According to extant records of wheat prices from Egypt, the above policies produced inflation, the average rate of which has been estimated, by certain economists to about 4-5% per annum. We follow the story up to Diocletian’s attempt, in late 301, to set price-ceilings, and suggest that most of the explanations offered to rationalize the phenomenon are probably not only partial, but also not even the main explanations. The inflation rates are underestimated as well. (The author is indebted toRaymond Lombra, Paul Harvey, and Eric Bond, for useful comments made to an earlier draft of the paper.)