Do we need a distinct monetary constitution?

Elements of the Chicago and Virginia traditions of political economy have rejected both competitive money production and money's politicization via post-constitutional bargaining, opting instead for constitutionalization. This paper argues that competitive money production is not subject to the pro-cyclicality that concerns constitutional political economy. It also meets the standard of predictability that motivates constitutional perspectives, although at the level of individual prices rather than the price level. An effective monetary constitution is implicit in any constitution that protects rights to property, contract, and exchange and sets limits on the democratic process.

► I argue that the constitutionalization of money is unnecessary for monetary stability. ► Constitutions that protect rights of property and contract are sufficient to do so. ► Laissez-faire can produce monetary institutions that neither inflate nor deflate. ► Good constitutions are therefore implicitly provide monetary stability.