Gresham's Law in a lemons market Public Deposited

Creator Series Issue number
  • 376
Keyword Subject Abstract
  • We describe a simple environment in which assets of varying qualities may be used for transactions and consumption. The quality of an asset is known to the seller but not the buyer. We show that this feature can generate a negative relationship between the transactions velocities of assets and their rates of return. We also discuss several versions of Gresham's Law which hold in this environment.
Contributor Date Created
  • 1987-10
Date Modified
  • 03/15/2018
Publisher
  • Federal Reserve Bank of Minneapolis. Research Division.
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