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Direct pricing of retail payment methods: Norway vs. US

Author

Listed:
  • Francisco José Callado Muñoz

    () (Dpt. Economia)

  • Jana Hromcová

    () (Universitat de Girona)

  • Natalia Utrero González

    () (Dpt. Economia)

Abstract

In 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.

Suggested Citation

  • Francisco José Callado Muñoz & Jana Hromcová & Natalia Utrero González, 2010. "Direct pricing of retail payment methods: Norway vs. US," Working Papers. Serie AD 2010-20, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasad:2010-20
    as

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    File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2010-20.pdf
    File Function: Fisrt version / Primera version, 2010
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    cash; payments; human capital; cash-in-advance;

    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, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models

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