The 'Principle of Invariance' in Currency Systems: A Comment on Caianiello et al.
13 Pages Posted: 5 Aug 2010
Date Written: August 2, 2010
In an often-cited article, Caianiello et al. (1982) formulate a “principle of invariance” for currency systems. They build on this principle to explain the distribution of the coins and banknotes in circulation over the different denominations, and to analyze how a currency system adjusts to inflation. This paper shows that Caianiello et al.’s distribution law is flawed because the principle of invariance is false.
Keywords: Currency denominations, principle of invariance, hierarchical self-organizing systems, refining transformations
JEL Classification: E4, E47
Suggested Citation: Suggested Citation