Gresham's law, which says that bad money tends to drive good money out of circulation, may account for many nations' episodes of money troubles, as far back as ancient Athens. This Commentary discusses the two main explanations for Gresham's law and suggests some circumstances in which the law does not apply.
It is often difficult to explain why a particular commodity or currency becomes a medium of exchange. The common wisdom is that currencies with good properties--high intrinsic ...