A Note on the Aggregation of Payment Decisions

Abstract

In this note, we study, test and discuss two original classes of payment aggregation rules based on transaction size models in order to replicate the demand for cash and deposits in the economy. First, we show that some of the aggregation rules call for special consideration since they better replicate the observed demand for cash and deposits. Second, we put forward a counterintuitive result which states that considering the difference between the use of payment card and check can significantly improve the prediction of the demand for cash.

Keywords: Demand for money, Payment Instruments, Forecasting and Simulations

JEL Classification: E41, E17, G2