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The Theory And Measurement Of Cash Payments; A Case Study Of The Netherlands

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Author Info

  • Edgar L. Feige

    (University of Wisconsin-Madison)

Abstract

One of the more intractable problems in the area of monetary economics is the measurement of cash payments. Whereas the stock of currency in circulation [C] is well defined and readily measured, the transactions velocity of currency [Vc] (the average number of times currency turns over in any given period) is difficult to measure. This paper examines alternative methods for estimating the average velocity of currency and the denomination specific velocity of cash employing data for the Netherlands. Estimates of the volume of cash payments are necessary to meaningfully measure the volume of total payments [MV] in an economy and hence, the total volume of transactions [PT]. Once the volume of cash payments is known, it is possible to employ Fisher’s equation of exchange [MV=PT] as a more general conceptual and empirical alternative to Keynes’ more limited income-expenditure [Y= C+I+G] identity.

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File URL: http://128.118.178.162/eps/mac/papers/0501/0501025.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 0501025.

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Length: 32 pages
Date of creation: 20 Jan 2005
Date of revision:
Handle: RePEc:wpa:wuwpma:0501025

Note: Type of Document - pdf; pages: 32
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Web page: http://128.118.178.162

Related research

Keywords: Cash payments; Velocity of currency; Equation of exchange; total transactions; underground economy.;

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References

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  1. Feige, Edgar L., 1985. "The Swedish Payments System and the Underground Economy," Working Paper Series 153, Research Institute of Industrial Economics.
  2. Edgar L. Feige, 2004. "How Big IS the Irregular Economy?," Macroeconomics 0404005, EconWPA.
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Cited by:
  1. Edgar L. Feige, 2001. "Taxation for the 21st Century: The Automated Payment Transaction (APT) Tax," Public Economics 0106001, EconWPA.
  2. Isaac Mbiti & David N. Weil, 2011. "Mobile Banking: The Impact of M-Pesa in Kenya," Working Papers 2011-13, Brown University, Department of Economics.

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