David Grover

Would local currencies make a good local economic development policy tool? The case of Ithaca Hours

The author investigates the relationship between local currencies and local economic development (LED) with the aid of evidence from a case study of the ‘Ithaca Hours’ currency in Ithaca, New York, USA. He aims to answer two related questions: (1) are local currencies good for local economic development? And (2) would they make a good local economic development policy tool? The circulation of Hours is found both to increase economic activity and to preserve local skills which might have been lost if the currency system had not been in place. He concludes, however, that the Hours model should not be adopted as policy without modifications, because the design suffers from poor incentive structures which depress circulation and limit the positive effects of the currency on LED.