Is Cash Used Only in the Shadow Economy?

Kari Takala and Matti Viren

International Economic Journal, 2010, vol. 24, issue 4, 525-540

Abstract: This paper analyzes the use of cash in the Euro area. It attempts to give at least a partial answer to the question of whether cash is predominantly used in the shadow economy and whether, consequently, the behavior of cash balances is useful in monitoring changes in the shadow economy. The paper shows that - contrary to what is often assumed - recent developments in cash demand (including changes in denomination structure) can be fairly well explained by certain economic and institutional factors. Changes in cash demand do not seem to correspond to changes in existing measures of the shadow economy, nor do cross-country comparisons reveal close correspondence.

Keywords: Shadow economy; cash demand; hoarding; interest rates (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (14)

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DOI: 10.1080/10168737.2010.525992

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