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An empirical analysis of euro cash payments

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  • Kippers, J.
  • Franses, Ph.H.B.F.

Abstract

If the denominational structure of the euro is used in an optimal way, there should be no preferences for using certain coins and notes. In Kippers et al. (2003) it is documented that the Dutch public did have certain preferences concerning the Dutch guilder, in the sense that some notes and coins were used less often than expected. With the advent of the euro, it is now of interest to examine whether these preferences also exist for euro coins and notes, also as the denominational structure of the guilder was 1-2?-5, while for the euro it is now 1-2-5. In this paper we use two new and rather unique data sets for the Netherlands to empirically examine if the euro range is used in an optimal way. Using a statistical model, specifically designed for this purpose, we find that the Dutch public does not seem to have preferences for certain denominations. Hence, the task of paying with cash has become easier for Dutch consumers.

Suggested Citation

  • Kippers, J. & Franses, Ph.H.B.F., 2003. "An empirical analysis of euro cash payments," Econometric Institute Research Papers EI 2003-25, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    • Handle: RePEc:ems:eureir:748
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    References listed on IDEAS

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    Cited by:

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    2. Joshi Harit & Mukherjee, Saral, 2017. "Transitions in currency denomination structure as supply disruption and demand distortion: Efficiency, Effectiveness and Bullwhip," IIMA Working Papers WP 2017-05-02, Indian Institute of Management Ahmedabad, Research and Publication Department.
    3. Prescott, Brian C. & Shy, Oz, 2023. "Cash payments and the penny policy debate," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 80-94.
    4. Bouhdaoui, Y. & Bounie, D. & François, A., 2014. "Convenient prices, cash payments and price rigidity," Economic Modelling, Elsevier, vol. 41(C), pages 329-337.
    5. Adriaan R. Soetevent, 2011. "Payment Choice, Image Motivation and Contributions to Charity: Evidence from a Field Experiment," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 180-205, February.
    6. Carlos A. Arango A. & Martha Misas A. & Juan Nicolás Hernández, 2004. "La Demanda de Especies Monetarias en Colombia: Estructura y Pronóstico," Borradores de Economia 309, Banco de la Republica de Colombia.
    7. Franses, Ph.H.B.F. & Kippers, J., 2003. "How do we pay with euro notes? Empirical evidence from Monopoly experiments," Econometric Institute Research Papers EI 2003-32, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    8. Chenavaz, Régis & Drouard, Joeffrey & Escobar, Octavio R. & Karoubi, Bruno, 2018. "Convenience pricing in online retailing: Evidence from Amazon.com," Economic Modelling, Elsevier, vol. 70(C), pages 127-139.
    9. Bouhdaoui, Yassine & Van Hove, Leo, 2017. "On the socially optimal density of coin and banknote series: Do production costs really matter?," Journal of Macroeconomics, Elsevier, vol. 52(C), pages 252-267.
    10. Philip Hans Franses, 2006. "On modeling panels of time series," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 60(4), pages 438-456, November.
    11. Bouhdaoui, Y. & Bounie, D., 2012. "Efficient payments: How much do they cost for the Central Bank?," Economic Modelling, Elsevier, vol. 29(5), pages 1579-1584.
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    13. Bouhdaoui, Y. & Bounie, D. & Van Hove, L., 2011. "Central banks and their banknote series: The efficiency-cost trade-off," Economic Modelling, Elsevier, vol. 28(4), pages 1482-1488, July.

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