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Inflationary impacts of penny and nickel elimination

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  • Oz Shy

    (Federal Reserve Bank of Atlanta)

Abstract

The paper investigates the inflationary implications for payments made in cash after removing the lowest and separately the second-lowest denomination coins from circulation in the United States. To obtain lower and upper bounds on cash inflationary or deflationary impacts, the computations utilize: (i) three rounding methods (symmetric, upward, and downward), and (ii) full dataset versus a restricted dataset (containing only the payments that must be rounded). Inflationary impacts on cash payments are computed both in aggregate and also separately according to 21 payment/merchant categories. The study also explores merchants’ potential income loss from rounding down cash payments.

Suggested Citation

  • Oz Shy, 2025. "Inflationary impacts of penny and nickel elimination," Journal of Regulatory Economics, Springer, vol. 68(2), pages 124-145, October.
    • Handle: RePEc:kap:regeco:v:68:y:2025:i:2:d:10.1007_s11149-025-09496-7
    DOI: 10.1007/s11149-025-09496-7
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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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