IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Payment Cards and Money Demand in Belgium

  • Laura Rinaldi

    ()

    (K.U.Leuven, C.E.S., International Economics)

The aim of this paper is to analyse the impact of payment cards use on the amount of money in circulation in Belgium. In all developed countries the amout of notes and coins has decreased over the past years. Such tendency can be attributed to a slow, but continuous process of substitution of cash by other means of payment for everyday transactions. If the substitution was first due to a widespread used of cheques, more recently this was intensified by cards' diffusion. This claim is supported by several empirical studies reviewed in this paper. They confirm the role of cards, together with their infrastructure (ATMs and EFT-POS terminals), in decreasing the number of cash transactions. We study a money demand model in Belgium through a co- integration analysis, where money is a function of structural variables, as well as some variables reflecting card's use in order to account for the substitution effect. We find that cards (debit, credit and, more recently, electronic purses) significantly contributed to the long run reduction of outstanding currency in Belgium over the last forty years. We extended the long run analysis into a more general error-correction model where short run imbalances significantly adjust to the long run relationship. Currency appears to respond quite slowly to disequilibria. Finally, we examine the dynamics of the model by means of impulse response functions that forecast the future developments of money demand.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.econ.kuleuven.ac.be/ew/admin/Publications/Dps0116.pdf
Download Restriction: no

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, International Economics in its series International Economics Working Papers Series with number ces0116.

as
in new window

Length: 29 pages
Date of creation:
Date of revision:
Handle: RePEc:kul:kulwps:ces0116
Contact details of provider: Postal: Naamsestraat 69, 3000 Leuven
Phone: +32-(0)16-32 67 25
Fax: +32-(0)16-32 67 96
Web page: http://www.econ.kuleuven.ac.be/ew/academic/intecon
Email:


More information through EDIRC

Order Information: Email:


No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:kul:kulwps:ces0116. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jan Van Hove)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.