Credit cards and aggregate money demand

This paper attempts to assess the effect of the growth in the use of credit cards upon aggregate household money holdings. In an inventory theoretic structure, when individuals have the choice of whether to use a credit card as an alternative means of payments, and with a given income distribution,...

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Bibliographic Details
Published in:Journal of macroeconomics 1986-10, Vol.8 (4), p.471-478
Main Authors: Akhand, Hafiz, Milbourne, Ross
Format: Article
Language:English
Subjects:
Aggregate
Credit cards
Demand
Economic models
Economic theory
Elasticity of demand
Income distribution
Money supply
Studies
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Summary:This paper attempts to assess the effect of the growth in the use of credit cards upon aggregate household money holdings. In an inventory theoretic structure, when individuals have the choice of whether to use a credit card as an alternative means of payments, and with a given income distribution, the aggregate money demand relation is derived. It is shown that the existence of an alternative means of payment changes the predictions on the relevant elasticities from the standard model, and makes them variable over time, and gives some indication of how credit card growth causes shifts in aggregate money demand.
ISSN:0164-0704
1873-152X
DOI:10.1016/0164-0704(86)90091-1