1201.3580 (Reginald D. Smith)

A drift formulation of Gresham's Law    [PDF]

Reginald D. Smith

In this paper we analyze Gresham's Law, in particular, how the rate of inflow
or outflow of currencies is affected by the demand elasticity of arbitrage and
the difference in face value ratios inside and outside of a country under a
bimetallic system. We find that these equations are very similar to those used
to describe drift in systems of free charged particles. In addition, we look at
how Gresham's Law would play out with multiple currencies and multiple
countries under a variety of connecting topologies.

View original: http://arxiv.org/abs/1201.3580