Money is Money: The Economic Impact of BerkShares

Community currencies are a popular way localities around the world pursue a sustainable economy. However, no studies look at the economic impact of community currencies using modern causal inference methods. We use the synthetic control method to examine the short and long-term effects of the popular community currency BerkShares on the number of businesses, unemployment rate, and per capita income in the county in which it circulates. The results suggest that BerkShares has had no impact either directly on businesses or indirectly on the local economy as a whole. Additionally, BerkShares has not impacted business dynamics. Results from the synthetic control method suggest that establishment births, deaths, expansions, and contractions following BerkShares are no different than what they would have been without the currency. Given its lack of impact, the results serve as a caution for localities considering community currencies as an economic development strategy.