Publications
Cash or card? A structural model of payment choices
Abstract: We use a large granular dataset to analyze the households' choice between cash and card payments. Empirically, both the size of the transaction and the amount of cash on hand appear as significant determinants of the payment choice. We unveil a novel interaction between these two variables: the critical size for a card purchase depends on the amount of cash on hand. We present a tractable model of payment choices, featuring non-universal acceptance of cards by merchants, and a random expenditure flow. The model generates a precautionary motive for holding a cash buffer: cards are used to avoid "running out of cash", accounting for the interaction discussed before. We use a calibrated version of the model to quantify the benefits of card ownership, the welfare costs of imperfect card acceptance by merchants, and to identify conditions under which a cashless economy emerges.
Intergenerational transmission of home-leaving patterns
Abstract: Exploiting intergenerationally linked data from the Survey of Health, Ageing and Retirement in Europe, we examine the association between the home-leaving ages of parents and those of their daughters and sons. We propose a framework in which intergenerational associations between nest-leaving patterns of successive generations might stem from three channels of transmission, and we rely on detailed information on three generations of individuals to establish the strength of each channel. We find that a 1-year increase in the age at which a parent left home is associated with children leaving the nest approximately 1 month later. We argue that the bulk of this association is due to direct cultural transmission of home-leaving ages stemming from the inheritance of preferences on the optimal timing of life-course events.
Working papers
Payments and cash management in the euro area: a quantitative analysis
Abstract: Average cash holdings and the intensity of card usage widely differ across Euro Area regions. ECB payment diaries show that such gaps emerge as a result of both supply-side differences (payments' acceptance by merchants) and demand-side ones (withdrawal and payment method choices). I present a dynamic cash management model featuring a payment method choice between cash and cards, uncertain lumpy expenditures/cash inflows, and imperfect acceptance of payment methods by merchants. I estimate the model at the region/province level by matching payment choice and cash management statistics, in order to quantify the drivers of geographical differences. I find that variation in card acceptance explains only around a third of geographical differences in card usage and it plays no role for the dispersion in cash holdings. The major drivers of heterogeneity in cash balances are differences in the cost of accessing and holding currency, while a large portion of gaps in card usage across regions are accounted for by differences in the relative taste for cashless payments.
Siblings and leaving the parental home
Abstract: We investigate whether the decision of young adults on when to leave the parental home is influenced by the number of siblings they have, in the context of European countries over the last seventy years. Exploiting random variation in sibship size induced by twin births, we identify the causal effect of having an extra sibling on the timing of home-leaving. We find that one additional sibling speeds up the transition to independent living by roughly six months. We provide evidence that our results stem from a decrease in the value of living with parents as the parental home gets more crowded.
Work in Progress
Merchant acceptance and cash demand in an equilibrium model of the payments market
Abstract: This paper studies the acceptance of cash and card payments by merchants, as well as consumers' demand for cash, in an economy featuring equilibrium linkages between buyers and sellers. Buyers can search for shops that accept cards and/or cash, generating competition between merchants. Sellers can decide to accept only cash, only cards or both instruments: they may be willing to accept cards in order to attract more customers, even though they earn lower profits on card transactions, or to stop accepting cash at all (cashless stores). We characterize equilibria and examine how card and cash acceptance rates respond to changes in search frictions, consumers' payment preferences, and in the costs of obtaining and holding cash. We then present a quantitative version of the model and calibrate it using ECB data from consumer payment diaries and merchant surveys. We use the model to study the effects of subsidies to the usage/acceptance of cash and cards, the welfare implications of decreased cash acceptance, and the resilience of payment systems to sudden disruptions.
A dynamic model of CBDC holdings and transactional use
Abstract: We study the transactional demand for a CBDC within an inventory-theoretical model of cash management and payment choices. Consumers face stochastic expenditures and choose whether to pay using cash, cards, or CBDC. Cash is universally accepted but involves withdrawal and holding costs, while cards economize on these costs at the expense of imperfect acceptance and usage fees. Depending on its design features, the CBDC combines elements of both instruments. We calibrate the model using data from the ECB SPACE survey to quantify payment method shares and transactional cash and CBDC balances. Thanks to its dynamic nature, this model uniquely encompasses both CBDC holding and usage decisions. We apply it to measure (i) the welfare value of CBDC features, (ii) the impact of CBDC on cash management costs and precautionary card usage, and (iii) the sensitivity of cash and CBDC holdings and usage to interest rates.