Direct pricing of retail payment methods: Norway vs. US
AbstractIn this paper we provide a general equilibrium model that helps explaining payment choice at the retail level: cash, electronic and paper-based instruments. In particular, it provides theoretical foundations to reconcile previous empirical evidence on this issue. The payment pattern of a given country can be shaped by the payment infrastructure, the cost of each payment instrument, the degree of technology development and the interest rate. We show that the introduction of a cheaper payment instrument, in this case electronic payments, may be welfare improving. The calibration exercise for Norway illustrates that the policy of correct pricing of checks promoted by the Norwegian authorities may imply 4% increase in the welfare of the country.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2010-20.
Length: 40 pages
Date of creation: May 2010
Date of revision:
Publication status: Published by Ivie
cash; payments; human capital; cash-in-advance;
Find related papers by JEL classification:
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- O42 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
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