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Money, E-money, and Consumer Welfare

Author

Listed:
  • Carli, Francesco
  • Uras, Burak

    (Tilburg University, Center For Economic Research)

Abstract

We develop a micro-founded monetary model to inquire the role of a privately provided e-money instrument for household consumption smoothing and welfare. Different from fiat money, e-money users pay electronic transaction fees, but in turn e-money reduces spatial separation frictions and enables risk-sharing. We characterize the conditions that promotes e-money to be Pareto improving and the conditions when e-money reduces its users' welfare - despite for the consumption-smoothing it induces. We calibrate our model for the context of M-Pesa in Kenya and conduct a quantitative analysis. Since our quantitative analysis reveals a limited role for privately provided e-money, we recommend the optimality of e-money regulation.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Carli, Francesco & Uras, Burak, 2022. "Money, E-money, and Consumer Welfare," Discussion Paper 2022-032, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:d6c0389e-1036-4748-9040-5b52809a491f
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    References listed on IDEAS

    as
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Money, e-money and consumer welfare
      by Christian Zimmermann in NEP-DGE blog on 2023-01-30 14:19:00

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    More about this item

    Keywords

    E-money; M-Pesa; Risk-sharing; welfare; Monetary Policy;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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