The 'Principle of Invariance' in Currency Systems: A Comment on Caianiello et al.

13 Pages Posted: 5 Aug 2010

See all articles by Yassine Bouhdaoui

Yassine Bouhdaoui

Vrije Universiteit Brussel

David Bounie

Télécom Paris

Leo Van Hove

Vrije Universiteit Brussel (VUB)

Date Written: August 2, 2010

Abstract

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

Bouhdaoui, Yassine and Bounie, David and Van Hove, Leo, The 'Principle of Invariance' in Currency Systems: A Comment on Caianiello et al. (August 2, 2010). Available at SSRN: https://ssrn.com/abstract=1652304 or http://dx.doi.org/10.2139/ssrn.1652304

Yassine Bouhdaoui

Vrije Universiteit Brussel ( email )

Boulevard de la Plaine 2
Ixelles, 1050
Belgium

David Bounie (Contact Author)

Télécom Paris ( email )

19 Place Marguerite Perey
Palaiseau, 91120
France

Leo Van Hove

Vrije Universiteit Brussel (VUB) ( email )

Department of Applied Economics (APEC)
Pleinlaan 5
Brussels, B-1050
Belgium
+32 2 614 84 49 (Phone)

HOME PAGE: http://research.vub.ac.be/applied-economics/members

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