dc.contributor |
Universitat Pompeu Fabra. Departament d'Economia i Empresa |
dc.contributor.author |
Mulligan, Casey B. |
dc.contributor.author |
Sala-i-Martin, Xavier, 1963- |
dc.date |
1995-08-01 |
dc.identifier.citation |
https://econ-papers.upf.edu/ca/paper.php?id=134 |
dc.identifier.citation |
Journal of Political Economy, 2000 |
dc.identifier.uri |
http://hdl.handle.net/10230/20891 |
dc.format |
application/pdf |
dc.language.iso |
eng |
dc.relation |
Economics and Business Working Papers Series; 134 |
dc.rights |
L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons |
dc.rights |
info:eu-repo/semantics/openAccess |
dc.rights |
http://creativecommons.org/licenses/by-nc-nd/3.0/es/ |
dc.subject |
Macroeconomics and International Economics |
dc.title |
Adoption of financial technologies : implications for money demand and monetary policy |
dc.title |
The adoption costs of financial technologies : implications for monetary policy |
dc.type |
info:eu-repo/semantics/workingPaper |
dc.description.abstract |
In this paper we argue that inventory models are probably not useful
models of household money demand because the majority of households does not
hold any interest bearing assets. The relevant decision for most people is not
the fraction of assets to be held in interest bearing form, but whether to hold
any of such assets at all.
The implications of this realization are interesting and important. We find that
(a) the elasticity of money demand is very small when the interest rate is small,
(b) the probability that a household holds any amount of interest bearing assets
is positively related to the level of financial assets, and (c) the cost of
adopting financial technologies is positively related to age and negatively related
to the level of education.
Unlike the traditional methods of money demand estimation, our methodology allows
for the estimation of the interest--elasticity at low values of the nominal
interest rate. The finding that the elasticity is very small for interest rates
below 5 percent suggests that the welfare costs of inflation are small.
At interest rates of 6 percent, the elasticity is close to 0.5. We find that
roughly one half of this elasticity can be attributed to the Baumol--Tobin or
intensive margin and half of it can be attributed to the new adopters or extensive
margin. The intensive margin is less important at lower interest rates and more
important at higher interest rates. |