Towards a cashless economy: Economic and socio-political implications

Nissim Cohen; Anna Rubinchik; Labib Shami

doi:10.1016/j.ejpoleco.2019.101820

Towards a cashless economy: Economic and socio-political implications

Nissim Cohen, Anna Rubinchik, Labib Shami

Research output: Contribution to journal › Article › peer-review

17 Scopus citations

Abstract

We construct a simple general equilibrium model to demonstrate how eliminating cash can lead to a misallocation of resources in a naturally segmented economy with observed (official) and non-observed (informal) sectors. The source of inefficiency mirrors the standard arguments explaining why money is essential: a promise backed by a good produced in one sector can not be used in another and so absence of a reliable fiat money reduces the gains from trade. We also point to several additional unintended consequences of cash elimination.

Original language	English
Article number	101820
Journal	European Journal of Political Economy
Volume	61
DOIs	https://doi.org/10.1016/j.ejpoleco.2019.101820
State	Published - 1 Jan 2020
Externally published	Yes

Keywords

Cash
Money
Segmented markets
Shadow economy

ASJC Scopus subject areas

Economics and Econometrics
Political Science and International Relations

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.ejpoleco.2019.101820

Cite this

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AU - Shami, Labib

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N2 - We construct a simple general equilibrium model to demonstrate how eliminating cash can lead to a misallocation of resources in a naturally segmented economy with observed (official) and non-observed (informal) sectors. The source of inefficiency mirrors the standard arguments explaining why money is essential: a promise backed by a good produced in one sector can not be used in another and so absence of a reliable fiat money reduces the gains from trade. We also point to several additional unintended consequences of cash elimination.

AB - We construct a simple general equilibrium model to demonstrate how eliminating cash can lead to a misallocation of resources in a naturally segmented economy with observed (official) and non-observed (informal) sectors. The source of inefficiency mirrors the standard arguments explaining why money is essential: a promise backed by a good produced in one sector can not be used in another and so absence of a reliable fiat money reduces the gains from trade. We also point to several additional unintended consequences of cash elimination.

KW - Cash

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KW - Segmented markets

KW - Shadow economy

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Towards a cashless economy: Economic and socio-political implications

Abstract

Keywords

ASJC Scopus subject areas

UN SDGs

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