Towards a cashless economy: Economic and socio-political implications

Nissim Cohen, Anna Rubinchik, Labib Shami

Research output: Contribution to journalArticlepeer-review

17 Scopus citations


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 languageEnglish
Article number101820
JournalEuropean Journal of Political Economy
StatePublished - 1 Jan 2020
Externally publishedYes


  • Cash
  • Money
  • Segmented markets
  • Shadow economy

ASJC Scopus subject areas

  • Economics and Econometrics
  • Political Science and International Relations


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