GOOD MONEY DRIVES OUT BAD: A NOTE ON FREE COINAGE AND GRESHAM'S LAW IN THE CHINESE HAN DYNASTY

Yen-liang Chen and Cheng-chung Lai

Economic History of Developing Regions, 2012, vol. 27, issue 2, 37-46

Abstract: Gresham's law states only one precondition: in the world of metal coins, if there is a fixed rate of exchange between good and bad money, then bad money will drive out good. We argue, however, that when there is no fixed exchange rate between good and bad money, and when the government encourages free coinage, then it is possible for good money to drive out bad. We use these two preconditions to explain why the sizhu coins were successful during the reign of Emperor Wen (179-157 BC) under his free coinage policy. Our analysis of their metal composition and their weights confirms that the sizhu coins minted under a free coinage policy had a better metal content those produced under a central minting policy. This supports our argument that in certain circumstances Gresham's Law will be reversed.

Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/20780389.2012.745660 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:rehdxx:v:27:y:2012:i:2:p:37-46

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rehd20

DOI: 10.1080/20780389.2012.745660

Access Statistics for this article

Economic History of Developing Regions is currently edited by Alex Klein and Alfonso Herranz-Loncan

More articles in Economic History of Developing Regions from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().