The surprising recovery of currency usage

J. Ashworth and C. A. E. Goodhart

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Currency usage began a long trend decline in the decades after World War II. This was expected to continue, and even accelerate, owing to payment technology innovations. Surprisingly, however, such usage as a percentage of GDP stopped falling and has increased quite sharply in recent years in most countries, with Sweden the major outlier. We examine to what extent this may have been due to increasing interest elasticity, nearing the zero lower bound, and also to rising tax evasion, as indirect taxes rise. We also show how currency holdings increased temporarily as the financial crisis struck in 2008.

Keywords: currency; interest elasticity; financial crisis; Grey economy; tax evasion (search for similar items in EconPapers)
JEL-codes: E40 E49 E63 H26 N10 N20 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2020-06-01
New Economics Papers: this item is included in nep-his, nep-iue, nep-mac and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Published in International Journal of Central Banking, 1, June, 2020, 16(3), pp. 239-277. ISSN: 1815-4654

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:105303

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