Gresham's Law Regained

49 Pages Posted: 15 Jan 2007 Last revised: 6 Feb 2022

See all articles by Robert L. Greenfield

Robert L. Greenfield

Fairleigh-Dickinson University - Silberman College of Business

Hugh Rockoff

Newark College of Arts & Sciences - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: January 1992

Abstract

It has been argued that Gresham's Law, bad money (money with a low value in non-monetary uses) drives out good, often fails because one money can circulate at its market value. Various cases involving the U.S. dollar in the nineteenth century have been cited as possible violations of the law resulting from nonpar circulation of the dollar. This paper analyzes these cases, and finds to the contrary that a "93 percent version" of Gresham's law held in all them. Evidently, there were high transactions costs associated with using good money at a premium or bad money at a discount.

Suggested Citation

Greenfield, Robert L. and Rockoff, Hugh T., Gresham's Law Regained (January 1992). NBER Working Paper No. h0035, Available at SSRN: https://ssrn.com/abstract=382141

Robert L. Greenfield (Contact Author)

Fairleigh-Dickinson University - Silberman College of Business

Madison, NJ 07940
United States

Hugh T. Rockoff

Newark College of Arts & Sciences - Department of Economics ( email )

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