Have a Penny? Need a Penny? Eliminating the One-Cent Coin from Circulation

Dinu Chande and Timothy Fisher

Canadian Public Policy, 2003, vol. 29, issue 4, 511-517

Abstract: We show there is a strong economic case for removing the one-cent coin from circulation in Canada. Using data from the Royal Canadian Mint, we show that seigniorage on the coin is negative. When the user cost associated with the inconvenience of the penny is added, the case for eliminating it is even more compelling. Simulations using price data from Tim Horton's show that rounding prices to the nearest nickel will not be inflationary. We conclude that Canada should follow Australia, New Zealand, the Netherlands, France, and Spain by removing the lowest denomination coin from circulation.

Date: 2003
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