Everything But the Powers of 2 and 3

16 Pages Posted: 25 Aug 2007

See all articles by David Bounie

David Bounie

Télécom Paris

Nicolas Houy

University of Cergy-Pontoise - THEMA

Date Written: August 22, 2007


In this paper, we generalize the power-of-2 and the power-of-3 monetary denomination systems (MDS) widely studied in the literature by considering the class of the power-of-α MDSs for all real α strictly between 1 and infinity. We show that for theoretical distributions of prices as well as for an actually observed distribution of prices, the power-of-2 and the power-of-3 MDSs are never the most efficient MDSs.

Keywords: Currency denomination, Monetary Denomination Efficiency

JEL Classification: E4, E47

Suggested Citation

Bounie, David and Houy, Nicolas, Everything But the Powers of 2 and 3 (August 22, 2007). Available at SSRN: https://ssrn.com/abstract=1009192 or http://dx.doi.org/10.2139/ssrn.1009192

David Bounie

Télécom Paris ( email )

19 Place Marguerite Perey
Palaiseau, 91120

Nicolas Houy (Contact Author)

University of Cergy-Pontoise - THEMA ( email )

33 boulevard du port
F-95011 Cergy-Pontoise Cedex, 95011

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