Comments on: User cost of credit card services under risk with intertemporal nonseparability https://monetarypolicy2018.weaconferences.net/papers/user-cost-of-credit-card-services-under-risk-with-intertemporal-nonseparability/ 19th February to 20th April, 2018 Mon, 09 Jun 2025 12:37:55 +0000 hourly 1 By: William A. Barnett https://monetarypolicy2018.weaconferences.net/papers/user-cost-of-credit-card-services-under-risk-with-intertemporal-nonseparability/#comment-37 Wed, 21 Mar 2018 13:52:35 +0000 http://monetarypolicy2018.weaconferences.net/?post_type=wea_paper&p=178#comment-37 Periklis and Ryan, the matter of how to deal with debit cards is a supply side question. It is a matter of measuring value added in financial intermediation. Credit cards do produce a unique form of value added — deferred payment. You cannot go into a store with a check book or with cash, buy something, and say you will return in a month to provide the cash or to write the check. The extension of monetary aggregation to include credit cards captures and includes that value added, which is not supplied by monetary assets. Debit cards are fundamentally different. They do provide services similar to checks. Those services are properties of the demand deposits, rather than fundamentally different produced services. For example, “checkability” is a fundamental service of demand deposits. Debit cards produce an analogous service of demand deposits. While the growing use of debit cards may have increased the liquidity of demand deposits, debit cards do not produce a fundamentally different value added in financial intermediation, but rather increase the services of the demand deposits themselves. At the present time, with interest rates on demand deposits being nearly zero, the Divisia monetary aggregates treat demand deposits as being almost equally as liquid as cash, at the margin, and hence cannot be viewed as undervaluing the liquidity services of demand deposits. Perhaps when interest rates on demand deposits rise, it might be worthwhile to take another look at extracting the services of debit cards, but avoiding the risk of double counting, since already a service of the demand deposits, would have to be taken very seriously.

]]> By: William A. Barnett https://monetarypolicy2018.weaconferences.net/papers/user-cost-of-credit-card-services-under-risk-with-intertemporal-nonseparability/#comment-35 Wed, 21 Mar 2018 13:13:45 +0000 http://monetarypolicy2018.weaconferences.net/?post_type=wea_paper&p=178#comment-35 Perikils, I am wondering whether you had intended to post your comment to the paper with Liting Su, rather than to this paper with Jinan Liu. The paper with Liting Su is about the supply side. This paper with Jinan Liu is about demand side aggregation.

]]> By: Ryan Mattson https://monetarypolicy2018.weaconferences.net/papers/user-cost-of-credit-card-services-under-risk-with-intertemporal-nonseparability/#comment-31 Tue, 20 Mar 2018 15:32:12 +0000 http://monetarypolicy2018.weaconferences.net/?post_type=wea_paper&p=178#comment-31 This paper gets better with every version I read. It’s come a long way since last year’s SEM, Jinan.

Periklis, is there any data that distinguishes the debt card use from checking? US debit cards are linked to checking (and savings?) accounts, so the amount of that is included. I’m not sure how you would separate out the debit from checking in Divisia since an interest bearing checking account would draw from those deposits earning the same return. There are those debit cards that can be used as credit cards, but stilll not certain how to differentiate that.

I’ve been wondering something similar with the increased use of $100 bills in the US, but I’m not sure how one could separate that out from use of other denominations.

]]> By: Periklis Gogas https://monetarypolicy2018.weaconferences.net/papers/user-cost-of-credit-card-services-under-risk-with-intertemporal-nonseparability/#comment-27 Thu, 15 Mar 2018 15:29:49 +0000 http://monetarypolicy2018.weaconferences.net/?post_type=wea_paper&p=178#comment-27 A brilliant idea and a novel application of something that is actually terra incognita in money supply in the field of monetary economics and macroeconomics. The use of credit-cards as an additional component of money quantity in the economy is surely something that has been overlooked all previous years, especially from the supply-side of the financial system as it is examined in this paper. I truly look forward to the extension of this work as there are many theoretical and empirical aspects that need exploring further. For this reason, an empirical application with actual data from the US and other countries would provide further support and will help to clarify and illustrate the theoretical part more. Nevertheless, an interesting topic would be to include debit cards in the sample as in many countries (especially european and developing) debit cards are also a substantial part of the overall transactions.

]]> By: monetarypolicyconferenceadmin https://monetarypolicy2018.weaconferences.net/papers/user-cost-of-credit-card-services-under-risk-with-intertemporal-nonseparability/#comment-20 Sun, 11 Mar 2018 00:24:02 +0000 http://monetarypolicy2018.weaconferences.net/?post_type=wea_paper&p=178#comment-20 Look forward to the empirical verification. It seems very relevant to me.

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