nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2018‒05‒28
twenty-two papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Bitcoin Risk Modeling with Blockchain Graphs By Cuneyt Akcora; Matthew Dixon; Yulia Gel; Murat Kantarcioglu
  2. Cryptocurrencies, Digital Currencies, and Distributed Ledger Technologies: What Are We Learning? : a speech at the Decoding Digital Currency Conference, Sponsored by the Federal Reserve Bank of San Francisco, San Francisco, California, May 15, 2018. By Brainard, Lael
  3. Broadening narrow money: monetary policy with a central bank digital currency By Meaning, Jack; Dyson, Ben; Barker, James; Clayton, Emily
  4. How big is China’s digital economy? By Alicia García-Herrero; Jianwei Xu
  5. Does the Utilization of Information Communication Technology Promote Entrepreneurship: Evidence from Rural China By Barnett, William; Hu, Mingzhi; Wang, Xue
  6. Central bank digital currencies - design principles and balance sheet implications By Kumhof, Michael; Noone, Clare
  7. Introduction to Special Issue: Mobile technologies and inclusive development in Africa By Simplice Asongu; Agyenim Boateng
  8. Gender Digital Divide and Youth Business Group Leadership By Holden , Stein T.; Tilahun , Mesfin
  9. Online-Meeting statt Dienstreise: Unternehmen könnten 8,3 Mrd. Euro sparen By Engels, Barbara
  10. The (Un)Demand for Money in Canada By Geoffrey Dunbar; Casey Jones
  11. Mobility and Regional Competitiveness in the Digital Age By Bence Zuti
  12. Digitalisation and Jobs in the Real Estate Industry By Daniel Piazolo
  13. The potential of big housing data: an application to the Italian real-estate market By Michele Loberto; Andrea Luciani; Marco Pangallo
  14. Zero-rating, network effects, and capacity investments By Steffen Hoernig; Francisco Monteiro
  15. Consumer Arbitrage in Cross-Border E-commerce By José Anson; Mauro Boffa
  16. The multistakeholder model of Internet governance, ICANN, and business stakeholders - practices of hegemonic power By Van Klyton, Aaron; Arrieta Paredes, Mary; Soomaree, Ayush
  17. Toward labor market policy 2.0 : the potential for using online job-portal big data to inform labor market policies in India By Nomura,Shinsaku; Imaizumi,Saori; Areias,Ana Carolina; Yamauchi,Futoshi; Nomura,Shinsaku; Imaizumi,Saori; Areias,Ana Carolina; Yamauchi,Futoshi
  18. Can pecuniary and environmental incentives via SMS messaging make households adjust their intra-day electricity demand to a fluctuating production? By Niels Framroze Møller; Laura Mørch Andersen; Lars Gårn Hansen; Carsten Lynge Jensen
  19. Keynes: ley de Say y demanda de dinero. By Barón Ortegón, Brayan Alexander
  20. Cost-Benefit Analysis of Artificial Intelligence (AI) Fired Robots (AI-Bots) Replacing Educators By Tejendra Kalia
  21. Digitization, Computerization, Networking, Automation, and the Future of Jobs in Japan (Japanese) By IWAMOTO Koichi; TANOUE Yuta
  22. Do homeowners save more? – Evidence from the Panel on Household Finances (PHF) By Tobias Schmidt; Julia Le Blanc

  1. By: Cuneyt Akcora; Matthew Dixon; Yulia Gel; Murat Kantarcioglu
    Abstract: A key challenge for Bitcoin cryptocurrency holders, such as startups using ICOs to raise funding, is managing their FX risk. Specifically, a misinformed decision to convert Bitcoin to fiat currency could, by itself, cost USD millions. In contrast to financial exchanges, Blockchain based crypto-currencies expose the entire transaction history to the public. By processing all transactions, we model the network with a high fidelity graph so that it is possible to characterize how the flow of information in the network evolves over time. We demonstrate how this data representation permits a new form of microstructure modeling - with the emphasis on the topological network structures to study the role of users, entities and their interactions in formation and dynamics of crypto-currency investment risk. In particular, we identify certain sub-graphs ('chainlets') that exhibit predictive influence on Bitcoin price and volatility, and characterize the types of chainlets that signify extreme losses.
    Date: 2018–05
  2. By: Brainard, Lael (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2018–05–22
  3. By: Meaning, Jack (Bank of England); Dyson, Ben (Bank of England); Barker, James (University of Exeter); Clayton, Emily (Bank of England)
    Abstract: This paper discusses central bank digital currency (CBDC) and its potential impact on the monetary transmission mechanism. We first offer a general definition of CBDC which should make the concept accessible to a wide range of economists and policy practitioners. We then investigate how CBDC could affect the various stages of transmission, from markets for central bank money to the real economy. We conclude that monetary policy would be able to operate much as it does now, by varying the price or quantity of central bank money, and that transmission may even strengthen for a given change in policy instruments.
    Keywords: Central bank digital currency; money; monetary policy; cryptocurrency
    JEL: E42 E52 E58
    Date: 2018–05–18
  4. By: Alicia García-Herrero; Jianwei Xu
    Abstract: This paper reviews international measures of the digital economy and compares them with those developed by Chinese officials and private sources. Given the lack of comparability, we use China’s input and output and census data to come up with an internationally comparable estimate of the size of China’s information and communication technology (ICT) sector (the core of digital economy), in terms of both value added and employment. Based on the latest available statistics, our measurements indicate that China’s digital economy is not bigger relative to the size of the Chinese economy than the OECD average, especially in terms of ICT employment. This finding, which might look striking based on the current perception of China’s digital economy, masks large differences across regions (with Beijing, Guangdong and Shanghai ahead of the OECD average).
    Date: 2018–05
  5. By: Barnett, William; Hu, Mingzhi; Wang, Xue
    Abstract: Impacts on the probability of transition to entrepreneurship in rural China associated with the utilization of information communication technology (ICT) are estimated using longitudinal data from the China Family Panel Studies (CFPS) survey. We identify cell phone ownership and internet use as proxy variables for ICT utilization and find that cell phone ownership and internet use have positive impacts on entrepreneurship. After controlling for observables and time and regional fixed effects, cell phone users (internet users) are 2.0 (6.4) percentage points more likely to engage in entrepreneurship than the others. Considering that the average entrepreneurship rate for rural households is only 9.5% in the sample, the influence of cell phone ownership and internet use are very strong in the economic sense. Our results are robust to unobservable individual characteristics, model misspecification, and reverse causality of entrepreneurship to ICT utilization. Evidence also suggests that social network and information and knowledge acquisition play the mediating roles in the impact of ICT utilization on entrepreneurship.
    Keywords: ICT; social network; information acquisition; entrepreneurship
    JEL: D10 M51 Q55
    Date: 2018–03–18
  6. By: Kumhof, Michael (Bank of England); Noone, Clare (Reserve Bank of Australia)
    Abstract: This paper sets out three models of central bank digital currency (CBDC) that differ in the sectors that have access to CBDC. It studies sectoral balance sheet dynamics at the point of an initial CBDC introduction, and of an attempted large-scale run out of bank deposits into CBDC. We find that if the introduction of CBDC follows a set of core principles, bank funding is not necessarily reduced, credit and liquidity provision to the private sector need not contract, and the risk of a system-wide run from bank deposits to CBDC is addressed. The core principles are: (i) CBDC pays an adjustable interest rate. (ii) CBDC and reserves are distinct, and not convertible into each other. (iii) No guaranteed, on-demand convertibility of bank deposits into CBDC at commercial banks (and therefore by implication at the central bank). (iv) The central bank issues CBDC only against eligible securities (principally government securities). The final two principles imply that households and firms can freely trade bank deposits against CBDC in a private market, and that the private market can freely obtain additional CBDC from the central bank, at the posted CBDC interest rate and against eligible securities.
    Keywords: Central bank digital currencies; sectorial balance sheets; monetary systems; financial stability; bank runs
    JEL: E42 E44 E52 E58
    Date: 2018–05–18
  7. By: Simplice Asongu (Yaoundé/Cameroun); Agyenim Boateng (Glasgow, UK)
    Abstract: The primary objective of this special issue is to showcase high-quality interdisciplinary research in the field of mobile phone technology and inclusive economic development, with a view to inspire and educate readers and policy makers on the vital role of mobile phones in economic development in Africa. We hope that the articles in this special issue will encourage academics and policy makers to carry out more research on the challenges and opportunities mobile phone technology offers in our quest to develop our communities.
    Keywords: Mobile phones; inclusive human development; Africa
    JEL: G20 O40 I10 I20 I32
    Date: 2018–05
  8. By: Holden , Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Tilahun , Mesfin (Centre for Land Tenure Studies, Norwegian University of Life Sciences)
    Abstract: We assess the gender difference in mobile phone ownership among youth business group members, and how it affects election into leadership and group board positions in recently established rural youth business groups in northern Ethiopia. Based on data on 1125 youths from 119 youth business groups where 32% of the members were female, 37% of the females and 70% of the males owned mobile phones. Male members were twice as likely to become board members and five times as likely to become group leaders. While there was a strong gender effect, having a mobile phone had an even stronger effect enhancing the likelihood of members becoming board members by 17.4 percentage points. Male gender and mobile phone ownership had equally strong effects on members becoming group leaders. Male group members were on average older than female group members, and with there being a significant age effect, this also contributed to the male dominance in group boards and leadership positions. Education also increased the likelihood of members becoming leaders and board members but this did not increase the gender gap in selection into such positions, as females were equally well educated as males.
    Keywords: Mobile phone ownership; gender gap; education; group leadership; youth business groups; Ethiopia.
    JEL: D23 D83 J16 P13
    Date: 2018–05–16
  9. By: Engels, Barbara
    Abstract: Digitale Technologien wie Videokonferenzen helfen, Distanzen zu überbrücken und schneller zu kommunizieren. Würden mehr Unternehmen diese einsetzen, um Dienstreisen zu ersetzen, könnte die deutsche Wirtschaft 8,3 Milliarden Euro im Jahr einsparen - zumindest in der Theorie.
    Date: 2018
  10. By: Geoffrey Dunbar; Casey Jones
    Abstract: A novel dataset from the Bank of Canada is used to estimate the deposit functions for banknotes in Canada for three denominations: $1,000, $100 and $50. The broad flavour of the empirical findings is that denominations are different monies, and the structural estimates identify the underlying sources of the non-neutrality. There is evidence of large and significant deposit costs for the highest-value denomination, the $1,000 banknote, but insignificant costs for the $100 and $50 denominations. The results imply that the interest rate elasticity of deposit is positive for the $1,000 but negative for the $100 and the $50. Third, 5 percent of the $1,000, 30 percent of the $100 and 22 percent of the $50 banknotes ever issued by the Bank of Canada do not circulate through financial institutions (in Canada). Finally, we find evidence that the Lehman Brothers crisis increased the deposit probability by a factor of 2–3 for the $1,000 banknote for a majority of the population in Canada.
    Keywords: Bank notes, Econometric and statistical methods
    JEL: E41 C31 C36
    Date: 2018
  11. By: Bence Zuti (University of Szeged, Hungary)
    Abstract: Digitalization is one of the key drivers of accelerated change in our everyday lives, both on an economic and social level. With solutions enabled through ICT technologies, we are more connected than ever on the global scale. In this next chapter of globalization, we currently experience significant transition in the structure of industries, consumer behavior and how we collect and manage data. This transition requires a shift in mindset, as we need to reevaluate the key factors of competitiveness, in order to prepare ourselves for rapid and presumably disruptive changes. These changes, however, mean to ease our everyday lives in the long run. The presence of an advanced regional infrastructure is a crucial factor in enhancing the competitiveness of regional economies, hence the opportunities in mobility in the digital age need to be revised. The aim of the paper is to systematize the key connections between digitalization, mobility and regional competitiveness while mapping potential challenges in the topic as well.
    Keywords: regional competitiveness, digitalization, globalization, regional mobility, urban mobility
    Date: 2018–04
  12. By: Daniel Piazolo
    Abstract: Digital technologies and automation of job routines will lead to the replacement of administrative and operative roles in which activities are most repetitive and predictable. Analyses find for Facility Management jobs a 70 percent chance of being automated. However, novel possibilities through the use of digital tools like artificial intelligence will create new employment possibilities within the various real estate areas like Facility Management and Property Management. This paper will examine the likely loosers and winners within the real estate industry due to the digital revolution. A larger share of the real estate sector work force will perform complex, judgement-based problem solving. Higher-skilled and better paying jobs will emerge. Digitalisation is a job killer and a job engine at the same time.
    Keywords: Automation; Digitalisation; Disruption; Employment; Future of work
    JEL: R3
    Date: 2017–07–01
  13. By: Michele Loberto (Bank of Italy); Andrea Luciani (Bank of Italy); Marco Pangallo (University of Oxford)
    Abstract: We present a new dataset of housing sales advertisements (ads) taken from, a popular online portal for real estate services in Italy. This dataset fills a big gap in Italian housing market statistics, namely the absence of detailed physical characteristics for houses sold. The granularity of online data also makes possible timely analyses at a very detailed geographical level. We first address the main problem of the dataset, i.e. the mismatch between ads and actual housing units - agencies have incentives for posting multiple ads for the same unit. We correct this distortion by using machine learning tools and provide evidence about its quantitative relevance. We then show that the information from this dataset is consistent with existing official statistical sources. Finally, we present some unique applications for these data. For example, we provide first evidence at the Italian level that online interest in a particular area is a leading indicator of prices. Our work is a concrete example of the potential of large user-generated online databases for institutional applications.
    Keywords: big data, machine learning, housing market
    JEL: C44 C81 R31
    Date: 2018–04
  14. By: Steffen Hoernig; Francisco Monteiro
    Abstract: We consider internet service providers? incentives to zero-rate, i.e. do not count towards data allowances, the consumption of certain services, in the absence of payments from content providers. In a general model with various types of network effects, service substitutes or complements, monopoly and duopoly, we show that ISPs adopt zero-rating and that it increases consumer surplus and total welfare if network effects are strong enough. Capacity investment increases (decreases) with network effects if services are complements (substitutes). Under competition, the decision to zero-rate depends the residual network effect, which includes the impacts of spillovers and brand differentiation.JEL codes: D21, L51, L96
    Keywords: zero-rating; network effects; net neutrality; capacity Investment
    Date: 2018
  15. By: José Anson; Mauro Boffa
    Abstract: In today's internet markets consumers can search for, find and compare prices worldwide. Online, information circulates faster than offline and arbitrage opportunities such as the ones arising from currency shocks are easily unveiled. In this paper, we estimate for the first time exchange rate elasticities for cross-border e-commerce transactions. Exploiting a new high-frequency database on international transactions of parcels, we find that a 1 % appreciation of the domestic currency increases e-commerce imports by 0.7 %. Comparing the result with traditional estimates in offline markets, this implies a 50 % exchange rate pass-through online.
    Keywords: Online trade, Arbitrage, Exchange rate pass-through
    JEL: F F
    Date: 2018–03
  16. By: Van Klyton, Aaron; Arrieta Paredes, Mary; Soomaree, Ayush
    Abstract: This research examines the relationship between the Internet Corporation of Assigned Names and Numbers (ICANN) and three groups of business stakeholders who participate in the multistakeholder model of Internet governance. The authors argue that ICANN’s use of ‘participatory evangelism’ serves as a device for the production of hegemonic power within the Internet governance model. By performing textual linguistic analysis on archival transcripts of triannual meetings from 2012 until 2016, the study operationalises hegemony as a dependent variable by linking stakeholder participation to the Internet governance policy-making agenda. By first identifying a ‘master variable’ that characterises the most general understanding of the data, statistical methods were used to construct a model with hegemony as a response variable. Furthermore, Analysis of Variance and Panel Data models were applied to measure variation in tone across the three groups of business stakeholders to understand how hegemony is produced. Our findings show that by using language that expresses hesitation and uncertainty, but at the same time is resolute with less complex discourses, the business sector stakeholders contribute to the production of hegemony that would theoretically benefit ICANN. This research underscores the importance of language and discourse as a driver of power within the Internet Governance.
    Keywords: hegemony; Gramsci; Internet governance; multistakeholderism; DICTION 7.0; participatory evangelism;
    JEL: L86 O33 P16
    Date: 2018–05–16
  17. By: Nomura,Shinsaku; Imaizumi,Saori; Areias,Ana Carolina; Yamauchi,Futoshi; Nomura,Shinsaku; Imaizumi,Saori; Areias,Ana Carolina; Yamauchi,Futoshi
    Abstract: Economists and other social scientists are increasingly using big data analytics to address longstanding economic questions and complement existing information sources. Big data produced by online platforms can yield a wealth of diverse, highly granular, multidimensional information with a variety of potential applications. This paper examines how online job-portal data can be used as a basis for policy-relevant research in the fields of labor economics and workforce skills development, through an empirical analysis of information generated by Babajob, an online Indian job portal. The analysis highlights five key areas where online job-portal data can contribute to the development of labor market policies and analytical knowledge: (i) labor market monitoring and analysis; (ii) assessing demand for workforce skills; (iii) observing job-search behavior and improving skills matching; (iv) predictive analysis of skills demand; and (v) experimental studies. The unique nature of the data produced by online job-search portals allows for the application of diverse analytical methodologies, including descriptive data analysis, time-series analysis, text analysis, predictive analysis, and transactional data analysis. This paper is intended to contribute to the academic literature and the development of public policies. It contributes to the literature on labor economics through application of big data analytics to real-world data. The analysis also provides a unique case study on labor market data analytics in a developing-country context in South Asia. Finally, the report examines the potential for using big data to improve the design and implementation of labor market policies and promote demand-driven skills development.
    Keywords: Labor Markets,Rural Labor Markets,ICT Applications,Educational Sciences
    Date: 2017–02–09
  18. By: Niels Framroze Møller (DTU Management Engineering, Technical University of Denmark); Laura Mørch Andersen (Department of Food and Resource Economics, University of Copenhagen); Lars Gårn Hansen (Department of Food and Resource Economics, University of Copenhagen); Carsten Lynge Jensen (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: The increasing deployment of renewables introduces substantial variability into the production of electricity, requiring demand to be more movable across time. We analyze data from a large Danish fi eld experiment (2015-2016) to investigate whether households can be prompted, via SMS messages, to move electricity consumption, and if so, whether these are motivated by pecuniary or environmental motives. To take heterogeneity fully into account we fi rst use general-to-speci c-based automatic model selection which allows for a different time-series regression for each of the 1488 households studied. From this we obtain a cross-section of estimated SMS effects which we then regress on the motive type. Since households can opt out there is a risk of self-selection. We therefore control for the size, income and average consumption of the household, and the age, educational- and labor market status of the SMS recipient. The results suggest that SMS messages can to some extent motivate households to move consumption. A stronger fi nancial motive seems more effective, whereas a purely environmental motive actually reduces the displaced amount. However, mixing financial and environmental motives seems the most effective. Finally, women and elderly people are more inclined to move consumption.
    Keywords: Household-level electricity demand, Automatic general-to-specific model selection, SMS messaging, field experimental data
    JEL: C2 C22 C5 Q4
    Date: 2018–05
  19. By: Barón Ortegón, Brayan Alexander
    Abstract: In this bibliographic review, the Keynes‘main arguments against the Say’s law are gathered, this law was thought to be a special case of a broader and general theory and therefore more powerful as economic policy is concerned. These insights are vital, to understand Keynesian economics and its subsequent contributions in economic theory and economic policy.
    Keywords: Keynes,Say's Law, Economic theory, demand for money, uncertainty,
    JEL: B0 B2 B22 B31 E12
    Date: 2017–05–14
  20. By: Tejendra Kalia (Worcester State University, MA)
    Abstract: In 2016, Buckingham University’s Vice-Chancellor predicted that the educators will lose their traditional role in 10 years and effectively become little more than classroom assistants (2017, This is supported by the Georgia Institute of Technology’s Computer Science Professor “Ashok Goyal†, who has been using Jill Watson (AI-Bot) successfully since 2016 as a Teaching Assistant to help online students (2016, Hillary Lipko). Jokes cracking Sophia (AI-Bot) by Hanson Robotics of Hong Kong mimics human beings. She appeared at Austin in the 2016 Interactive Festival and in the same year became a citizen of Saudi Arabia (2016, Sean Martin). Apparently, AI-Bots have already demonstrated superior performance in many areas. This poses a threat to educators of being replaced by AI-Bots. However, AI-Bots are expensive. The cost of the most advanced AI-Bot “ASIMO†by Honda in 2016 was US$ 2.5 million ( Most are afraid of being replaced by Robots. In 2017, Sophia urged, people in India, not to fear AI-Bots, but the 2017 Oxford University’s study estimated that 47% of all U.S. jobs could be replaced by AI-Bots within 20 years. This trend is confirmed by the findings of the Center for Business and Economic Research at Ball State University, which attributed 85% of the 5.6m manufacturing job losses between 2000 to 2010 in the USA were due to technology.
    Keywords: Artificial Intelligence, AI-Bots, Sofia, ASIMO, Potential Savings
    Date: 2018–03
  21. By: IWAMOTO Koichi; TANOUE Yuta
    Abstract: In the seminal study, Frey & Osborne reported that 47% of the total employment in the United States is at risk of computerization. Many studies estimate how automation of work influences employment. In Japan, however, there are few studies which investigate the effect of automation and networking on future employment. It is important to discuss this based on facts and evidence. This paper describes the present situation in Japan on the impact of artificial intelligence (AI) on employment, utilizing a survey study. We first visited Japanese companies and conducted a field survey on the new technologies being introduced. Following this, in August 2017, we conducted a survey study of about 10,000 companies. This paper discusses the output of the survey study.
    Date: 2018–05
  22. By: Tobias Schmidt; Julia Le Blanc
    Abstract: In this paper we analyse the impact of property ownership on the saving behaviour of households. We are particularly interested in investigating whether homeowners save more than renters or not. A related question is whether mortgage payments and other regular savings are substitutes or complements for German households. To answer these questions we use a large cross-sectional dataset on individual households’ finances and employ a matching estimator. We find that households owning property and repaying mortgages do save more than renters, if contractual savings and mortgage payments are summed up. However, the difference between regular savings flows of renters and owners is small and insignificant. Owners do not seem to substitute contractual savings with mortgage payments.
    Keywords: Homeownership; household saving; survey data
    JEL: R3
    Date: 2017–07–01

This nep-pay issue is ©2018 by Bernardo Bátiz-Lazo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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