nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2017‒07‒16
ten papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. How Soon Is Now? Evidence of Present Bias from Convex Time Budget Experiments By Uttara Balakrishnan; Johannes Haushofer; Pamela Jakiela
  2. OTT-messaging and mobile telecommunication: A joint market? - An empirical approach By Wellmann, Nicolas
  3. The blockchain folk theorem By Biais, Bruno; Bisière, Christophe; Bouvard, Matthieu; Casamatta, Catherine
  4. Mobile Phone Innovation and Environmental Sustainability in Sub-Saharan Africa By Simplice Asongu; Jacinta C. Nwachukwu
  5. Entrepreneurship, Education and the Fourth Industrial Revolution in Africa By Naudé, Wim
  6. Modeling the price of Bitcoin with fractional Brownian motion: a Monte Carlo approach By Mariusz Tarnopolski
  7. Application Bundling in System Markets By de Cornière, Alexandre; Taylor, Greg
  8. A note on automation, stagnation, and the implications of a robot tax By Gasteiger, Emanuel; Prettner, Klaus
  9. Balance del Banco Central de Chile, 1926 a 2015 By Pablo Filippi,; José Román; José Miguel Villena
  10. Social Usage of Money: Which Roles Does Money Play in the Life-Cycle-Stage of Children? By Klaus Kraemer; Florian Brugger; Luka Jakelja

  1. By: Uttara Balakrishnan; Johannes Haushofer; Pamela Jakiela
    Abstract: Empirically observed intertemporal choices about money have long been thought to exhibit present bias, i.e. higher short-term compared to long-term discount rates. Recently, this view has been called into question on both empirical and theoretical grounds, and a spate of recent findings suggest that present bias for money is minimal or non-existent when one allows for curvature in the utility function and transaction costs are tightly controlled. However, an alternative interpretation of many of these findings is that, in the interest of equalizing transaction costs across earlier and later payments, small delays were introduced between the time of the experiment and the soonest payment. We conduct a laboratory experiment in Kenya in which we elicit time and risk preference parameters from 494 participants, using convex time budgets and tightly controlling for transaction costs. We vary whether same-day payments are made immediately after the experimental session or at the close of the business day. Using the Kenyan mobile money system M-Pesa to make real-time transfers to subjects' phones allows us to make the soonest payments truly immediate. We find strong evidence of present bias, with estimates of the present bias parameter ranging from 0.902 to 0.924 — but only when same-day payments are made immediately after the experiment. This result suggests that present bias for money does in fact exist, but only for truly immediate payments.
    JEL: C91 D90 O12
    Date: 2017–06
  2. By: Wellmann, Nicolas
    Abstract: OTT-messenger such as facebook, WhatsApp have gained wide popularity among mobile users while traffic of text messaging has been in strong decline in several countries. This work is the first to provide an empirical analysis how consumption of OTT-messengers affects demand for text messaging and mobile telephony services. Our findings suggest that social and messaging apps complement demand for text messaging and mobile voice services rather than replacing it. More generally we identify the different nature of mobile telecommunication services as key element to explain why reductions of text messaging traffic have been so drastic in some countries and why an analogue development for mobile voice is rather unlikely.
    Keywords: OTT-messenger,mobile telecommunication,market definition,regulation,mature markets,communication behavior
    JEL: L96 L43 L51 C33 C36
    Date: 2017
  3. By: Biais, Bruno; Bisière, Christophe; Bouvard, Matthieu; Casamatta, Catherine
    Abstract: Blockchains are distributed ledgers, operated within peer-to-peer networks. If reliable and stable, they could offer a new, cost effective, way to record transactions and asset ownership, but are they? We model the blockchain as a stochastic game and analyse the equilibrium strategies of rational, strategic miners. We show that mining the longest chain is a Markov perfect equilibrium, without forking on the equilibrium path, in line with the seminal vision of Nakamoto (2008). We also clarify, however, that the blockchain game is a coordination game, which opens the scope for multiple equilibria. We show there exist equilibria with forks, leading to orphaned blocks and also possibly to persistent divergence between different chains.
    Date: 2017–05
  4. By: Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University, UK)
    Abstract: This study investigates how the mobile phone can complement knowledge diffusion in order to influence CO2 emissions in 44 Sub-Saharan African countries for the period 2000-2012. The empirical evidence is based on Generalised Method of Moments. Three knowledge diffusion variables representing three of the four pillars of the World Bank’s Knowledge Economy Index are employed: educational quality, information and communication technology (ICT) and scientific output. Six CO2 emission variables are used, namely: CO2 per capita, CO2 from electricity and heat, CO2 from liquid fuel, CO2 from manufacturing and construction, CO2 from transport and CO2 intensity. In the assessments, a decreasing tendency in these variables translates into positive conditions for environmental sustainability. Based on net effect from complementarities, the following findings are established. First, the mobile phone complements education to have a net negative effect on CO2 emissions per capita and CO2 emissions from the consumption of liquid fuel. Second, where some positive net effects of knowledge diffusion are apparent, corresponding marginal effects are negative. Corresponding mobile phone penetration thresholds at which the positive net effects on CO2 emissions can be dampened and reversed are largely within policy range. Practical and theoretical implications are discussed.
    Keywords: CO2 emissions; ICT; Economic development; Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2017–05
  5. By: Naudé, Wim (Maastricht University)
    Abstract: The Fourth Industrial Revolution (4IR) is impacting on the industrialization options for Africa inter alia through three interrelated sets of technologies, namely automation, additive manufacturing and the Industrial Internet. In this paper I set out the case for why Africa should industrialize. I then explore the opportunities and threats the 4IR pose for Africa. Threats include job-losses and the re-shoring of manufacturing to advanced economies. Among the opportunities are products-as-services, the sharing (collaborative) economy, and digital services and digital exports. These are markets that are currently underdeveloped in Africa but have substantial potential given Africa's geography, demography and on-going urbanisation. In order for the continent to benefit from the 4IR more needs to be done to improve entrepreneurship and education. A number of policy recommendations for 4IRcompatible entrepreneurship and education policies are made.
    Keywords: industrial policy, entrepreneurship, education, Africa
    JEL: O55 O25 O14 O33 L26 J24
    Date: 2017–06
  6. By: Mariusz Tarnopolski
    Abstract: The long-term dependence of Bitcoin (BTC), manifesting itself through a Hurst exponent $H>0.5$, is exploited in order to predict future BTC/USD price. A Monte Carlo simulation with $10^5$ fractional Brownian motion realisations is performed as extensions on historical data. The accuracy of statistical inferences is 20\%. The most probable Bitcoin price in 180 days is 4537 USD.
    Date: 2017–07
  7. By: de Cornière, Alexandre; Taylor, Greg
    Abstract: Motivated by recent investigations over Google's practices in the smartphone industry, we study bundling in markets for devices that allow consumers to use applications. The presence of applications on a device increases demand for it, and application developers earn revenues by interacting with consumers. A firm that controls multiple applications can offer them to device manufacturers either individually or as a bundle. We present a novel mechanism through which anticompetitive bundling can be profitable: Bundling reduces rival application developers' willingness to pay manufacturers for inclusion on their devices, and allows a multiapplication developer to capture a larger share of industry profit. Bundling can also strengthen competition between manufacturers and thereby increase consumer surplus, even if it leads to foreclosure of application developers and a loss in product variety.
    Keywords: Antitrust; Bundling; Mobile telecommunications
    JEL: L4 L86
    Date: 2017–07
  8. By: Gasteiger, Emanuel; Prettner, Klaus
    Abstract: We analyze the long-run growth effects of automation in the canonical overlapping generations framework. While automation implies constant returns to capital within this model class (even in the absence of technological progress), we show that it does not have the potential to lead to positive long-growth. The reason is that automation suppresses wages, which are the only source of investment because of the demographic structure of the overlapping generations model. This result stands in sharp contrast to the effects of automation in the representative agent setting, where positive long-run growth is feasible because agents can invest out of their wage income and out of their asset income. We also analyze the effects of a robot tax that has featured prominently in the policy debate on automation and show that it could raise the capital stock and per capita output at the steady state. However, the robot tax cannot induce a takeoff toward positive long-run growth.
    Keywords: automation,robots,robot taxes,investment,stagnation,economic growth,canonical overlapping generations model,fiscal policy
    JEL: J10 J20 O14 O33 O41 E62
    Date: 2017
  9. By: Pablo Filippi,; José Román; José Miguel Villena
    Abstract: The Central Bank balance sheet, its framework and evolution through time, shows the implementation of monetary and exchange rate policies and its relationship with the fiscal policy, so the publication of its main accounting items is a contribution to the analysis of the economic history of a country. This paper presents the historical series of the main accounting items of Banco Central de Chile from its foundation and it also describes the methodology used. The goal of the publication of these series is to promote future research that permits deep analyses, the acquisition of knowledge and understanding of the evolution of the Chilean economy. Furthermore, a brief description of the most important stylized facts of monetary and exchange rate policies, which occurred during the history of the Bank, are made considering previous studies. The series are annual and correspond to Total assets, Total Liabilities and Equity of Banco Central de Chile and its main components. The assets are broken down in Net International Reserves and Loans to the Public Sector. The main Liabilities that are presented are Monetary Base and Bonds and Promissory Notes issued by the central bank. Additionally, annual series from the first Memoria of 1926 are made available in digital format.
    Date: 2017–06
  10. By: Klaus Kraemer (Department of Sociology, University of Graz); Florian Brugger (Department of Sociology, University of Graz); Luka Jakelja (Department of Sociology, University of Graz)
    Abstract: Money can be used for different purposes. Its use can be driven by economic or non-economic motives. In this paper, we demonstrate the sociological shortcomings in the orthodox understanding of the functioning of money and suggest a heuristic framework in order to investigate the non-economic usages of money in everyday social reality. Firstly, we briefly discuss the basic economic functions of money. Secondly, we argue that sociological functions of money have to be taken into account in order to achieve a better understanding of the social implications of money. Thirdly, on this basis, we present the empirical findings of a quantitative study about everyday usage of money by children aged 7 to 10. The results indicate that in the usage of money by children, there can be found economic as well as social functions of money. Some non-economical usages of money differ depending on social background (class, migration).
    Date: 2017–07–03

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