Chapter 1; Risk Premiums -- Chapter 2: FX Forwards and the Carry Trade -- Chapter 3; Exchange Rates, Interest Rates, Inflation and the Risk Premium -- Chapter 4; The Mundell Fleming Model of the Exchange Rate -- Chapter 5: Valuation Models (PPP, DEER, FEER)? -- Chapter 6: What Drives Inflation and...

In this paper, the problem of why low-purchasing power silver coins depreciated relative to high-purchasing power gold coins is examined. The standard explanation by Sargent and Velde is refuted. It is argued that the relative stability of gold was due to the demand from consumers able to detect...