Gresham's law or gresham's fallacy
By: Arthur J. Rolnick and Warren E. Weber.
Contributors: Weber, Warren E.
Series: Federal Reserve Bank of Minneapolis, Research Department staff report -- 88; Staff report (Federal Reserve Bank of Minneapolis. Research Dept. : Online) -- 88.
Publisher: Federal Reserve Bank of Minneapolis
Published: 1983
Place of publication: [Minneapolis, Minn.]
Language: eng
Format: Electronic resource
Subjects: Gresham's law.
Description: "The claim that bad money drives out good is one of the oldest and most cited in economics.  Economists refer to this claim as Gresham's law.  Yet despite its seemingly universal acceptance, this claim does not warrant its status as a law.  We find it has no convincing explanations and many overlooked exceptions.  We propose an alternative hypothesis based on the costs of using a medium of exchange at a nonpar price: small-denomination currency undervalued at the mint tends to disappear from circulation while large-denomination currency usually circulates at premium.  Examining a variety of historical episodes when market and legal prices were different, we find our "law" can explain history much better than Gresham's"--Federal Reserve Bank of Minneapolis web site.
Notes: Title from PDF file as viewed on 11/9/2007.

Includes bibliographical references.

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