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Gresham's Law Regained

Robert L. Greenfield
Authors registered in the RePEc Author Service: Hugh Rockoff ()

No 35, NBER Historical Working Papers from National Bureau of Economic Research, Inc

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.

Date: 1992-01
Note: DAE
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Published as "Gresham's Law in Nineteenth-Century America, Journal of Money, Creditand Banking, 27 (4), November 1995, Part 1, pp. 1084-1098

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