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Gresham’s law

📈 Economics By CampusDown Wiki Editorial Team Last updated
Gresham’s law holds that when two monies with different intrinsic values must legally circulate at the same value, the better money is hoarded and the worse money circulates: “bad money drives out good”.
Contents
  1. 1. Overview
  2. 2. Frequently asked questions
  3. 3. References

Overview

Named by Henry Dunning Macleod (1858) after Tudor financier Thomas Gresham. It requires a legally fixed exchange ratio; with floating rates, good money may drive out bad (Rolnick & Weber, 1986). Metaphorical uses about low-quality goods are better explained by the market for lemons.

Frequently asked questions

Did Gresham state it?
Macleod named and formulated it.

References

  1. Macleod, H. D. (1858). The Elements of Political Economy. Longman.
  2. Rolnick, A. J., & Weber, W. E. (1986). Gresham’s law or Gresham’s fallacy? Journal of Political Economy, 94(1), 185–199.
  3. Selgin, G. (1996). Salvaging Gresham’s law: The good, the bad, and the illegal. Journal of Money, Credit and Banking, 28(4), 637–649.

Reports and materials that use this theory (Korean)

There are no materials dedicated to this theory yet, but you can search related reports in the CampusDown library (Korean).

Find more reports · Search '그레샴의 법칙' on CampusDown →
DeflationWhat deflation is, how it differs from disinflation, causes, why it is dangerous (delayed spending, Fisher’s debt deflation, zero lower bound), Japan’s experience and policy responses.📈 EconomicsMarket for lemonsA short explanation of Akerlof’s 1970 market for lemons, how quality uncertainty drives good used cars out of the market, remedies such as warranties and certification, and a link to adverse selection.📈 EconomicsQuantitative easingQuantitative easing (QE) is an unconventional monetary policy in which a central bank buys large amounts of assets such as government bonds to inject 📈 EconomicsSunk Cost and the Sunk Cost FallacySunk cost explained: why unrecoverable past costs should not affect decisions, the sunk cost (Concorde) fallacy, Arkes and Blumer's experiment, escalation of commitment, and how to avoid it in investing and career choices.📈 Economics

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This article was last updated on October 24, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.