nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2021‒01‒25
thirty-two papers chosen by

  1. The Digital Social Economy - Managing and Leveraging Platforms and Blockchain for a People-Centred Digital Transformation By Samuel BRÜLISAUER; Anastasia COSTANTINI; Gianluca PASTORELLI
  2. Accounting for Cloud Computing in the National Accounts By Andrew Baer; Kwangwon Lee; James Tebrake
  3. Monetizing Privacy By Rod Garratt; Michael Junho Lee
  4. Does Bitcoin Improve Investment Portfolio Efficiency? By Paweł Sakowski; Daria Turovtseva
  5. Filling the Gap: Digital Credit and Financial Inclusion By Majid Bazarbash; Kimberly Beaton
  6. Open Banking: Credit Market Competition When Borrowers Own the Data By Zhiguo He; Jing Huang; Jidong Zhou
  7. La guerre commerciale et technologique entre la Chine et les Etats-Unis. L'affaire TikTok By Jacques Fontanel; N Suscheva
  8. Banking sector earnings management using loan loss provisions in the Fintech era By Ozili, Peterson K
  9. Digital Payment - A Dream or Reality for Vietnamese in Rural and Remote Areas? By World Bank
  10. Career paths in online labor markets: Same, same but different? By Seifried, Mareike; Jurowetzki, Roman; Kretschmer, Tobias
  11. Digital Capital and Superstar Firms By Prasanna Tambe; Lorin Hitt; Daniel Rock; Erik Brynjolfsson
  12. Financial Intermediation and Technology: What’s Old, What’s New? By Arnoud W.A. Boot; Peter Hoffmann; Luc Laeven; Lev Ratnovski
  13. Does Online Search Improve the Match Quality of New Hires? By Gürtzgen, Nicole; Lochner, Benjamin; Pohlan, Laura; van den Berg, Gerard J.
  14. The shifting contours of trade in knowledge: The new "trade-related aspects" of intellectual property By Taubman, Antony
  15. Parallel Digital Currencies and Sticky Prices By Harald Uhlig; Taojun Xie
  16. Exploring the Impact of COVID-19 in the Sustainability of Airbnb Business Model By Rim Krouk; Fernando Almeida
  17. Central bank cryptocurrencies in a competitive equilibrium environment: Can strong money demand survive in the digital age? By Saito, Makoto
  18. The Bahamas; Financial Sector Assessment Program-Technical Note on Financial Inclusion, Retail Payments, and SME Finance By International Monetary Fund
  19. Quantum Technology for Economists By Hull, Isaiah; Sattath, Or; Diamanti, Eleni; Wendin, Göran
  20. Entry Threat, Entry Delay, and Internet Speed: The Timing of the U.S. Broadband Rollout By Wilson, Kyle; Xiao, Mo; Orazem, Peter F.
  21. The Mobile Phone Technology, Gender Inclusive Education and Public Accountability in Sub-Saharan Africa By Simplice A. Asongu; Alex Adegboye; Jeremiah Ejemeyovwi; Olaoluwa Umukoro
  22. "Keynes's Clearing Union Is Alive and Well and Living in Your Mobile Phone" By Jan Kregel
  23. Verification of Investment Opportunities on the Cryptocurrency Market within the Markowitz Framework By Paweł Sakowski; Anna Turovtseva
  24. The Market Trajectory of a Radically New Product: E-Cigarettes By Kislev, Mickey M.; Kislev, Shira
  25. A Survey of Research on Retail Central Bank Digital Currency By John Kiff; Jihad Alwazir; Sonja Davidovic; Aquiles Farias; Ashraf Khan; Tanai Khiaonarong; Majid Malaika; Hunter K Monroe; Nobu Sugimoto; Hervé Tourpe; Peter Zhou
  26. Digital Service Innovation in Plant and Mechanical Engineering: Exploring Contextual Factors in the Innovation Process By Koppe, Timo; Wahl-Islam, Nihal
  27. The Effects of Control Mechanisms on Complementors’ Behavioral Intentions: An Empirical Study of Reward-Based Crowdfunding Platforms By Croitor, Evgheni; Werner, Dominick; Benlian, Alexander
  28. Demonetisation 2016 and its impact on Indian economy and taxation By Pratap Singh
  29. Foreign demand for euro banknotes JEL Classification: E41, E47, E49, E59, F24 By Lalouette, Laure; Zamora-Pérez, Alejandro; Rusu, Codruta; Bartzsch, Nikolaus; Politronacci, Emmanuelle; Delmas, Martial; Rua, António; Brandi, Marco; Naksi, Martti
  30. Central Bank Digital Currency: When Price and Bank Stability Collide By Linda Schilling; Jesús Fernández-Villaverde; Harald Uhlig
  31. Research on the Online Consumption Effect of China’s Urbanization under Population Aging Background By Xuyang Li; Tongping Li; Hui Li; Junmei Qi; Linjie Hu
  32. Optimal Hedging with Margin Constraints and Default Aversion and its Application to Bitcoin Perpetual Futures By Carol Alexander; Jun Deng; Bin Zou

  1. By: Samuel BRÜLISAUER; Anastasia COSTANTINI (Diesis Network - European Research and Development Service for the Social Economy); Gianluca PASTORELLI
    Abstract: "Digitalisation and other advanced technologies are increasingly reshaping our economy, including social economy enterprises. Disruptive technologies can inspire the social economy and vice versa. Blockchain for instance carries an intrinsic decentralisation approach that could have many implications for services and generate a high social added value through traceability, fair pricing, commonly recognised and verified standards and democratization of access to services and products in all societies and areas."- Ms Ulla Engelmann, Head of Unit for Advanced Technologies, Social Economy and Clusters, European Commission, DG Grow In the first two decades of the new century digital technologies have started to reshape work, leisure, behaviour, health, education, money, governance, and other aspects of human life. As people and businesses start using digital appliances for all kinds of interaction, an increasing amount of communication and value exchange shifts to the digital realm. This megatrend holds many promises to spur innovation, generate efficiencies, and improve services, and in doing so boost more inclusive and sustainable growth. But these technologies also tend to disrupt traditional ways to organize our economy and society, entailing important consequences for people, organisations and markets, and raise important issues around jobs and skills, privacy, security. We use the term digital transformation to describe these social, cultural, and economic changes resulting from digital innovations, and identify four socio-technological areas in which people are particularly affected by this transformation: work and income goods and services, money and finance, and state and governance. Digital platforms and blockchains (and other distributed ledger technology) are two of the most impactful technologies. Because of the astonishing possibilities these technologies offer, observers regularly fathom that it is not only unfeasible but also undesirable to ‘stop’ the digital transformation. Rather, it is argued that digital technologies and their impacts must be actively managed and leveraged to ensure their alignment with people-centred development and sustainability. In this context, a growing number of social economy innovations aim to create an internet and digital appliances that put individual users and society first. Social economy enterprises and organizations are either based on participatory governance where users are ultimately in (partial) control over the platform/technology, or bound by a statutory purpose asserting the priority of social and environmental goals before financial returns. The digital social economy innovations discussed in this paper aim to realize this vision in the four areas undergoing digital transformation. Our analysis is informed by insights from the workshop organised by Diesis on “Blockchain, digital social innovation and social economy. The future is here!†, as well as case studies elaborated in close collaboration with various digital social economy enterprises. The study finds a vivid variety of digital social economy enterprises, and important potential for further applications of social economy principles in the digital realm. Yet the realization of this potential depends on whether these enterprises manage the critical challenge to achieve sustainable and user-centred growth. We therefore conclude with a discussion of this challenge and some recommendations for policy, organization and entrepreneurship.
    Keywords: SSocial Economy, Social Enterprise, Cooperative Platform, Blockchain, Social Innovation, Sustainable Development, Digitalisation
    JEL: L31 O33 O35
    Date: 2020–11
  2. By: Andrew Baer; Kwangwon Lee; James Tebrake
    Abstract: Digitalization and the innovative use of digital technologies is changing the way we work, learn, communicate, buy and sell products. One emerging digital technology of growing importance is cloud computing. More and more businesses, governments and households are purchasing hardware and software services from a small number of large cloud computing providers. This change is having an impact on how macroeconomic data are compiled and how they are interpreted by users. Specifically, this is changing the information and communication technology (ICT) investment pattern from one where ICT investment was diversified across many industries to a more concentrated investment pattern. Additionally, this is having an impact on cross-border flows of commercial services since the cloud service provider does not need to be located in the same economic territory as the purchaser of cloud services. This paper will outline some of the methodological and compilation challenges facing statisticians and analysts, provide some tools that can be used to overcome these challenges and highlight some of the implications these changes are having on the way users of national accounts data look at investment and trade in commercial services.
    Keywords: Cloud computing;Imports;Service exports;Information technology in revenue administration;Employee contributions;WP,cloud computing service,cloud service,IT service,cloud computing firm,Cloud storage service,computer processing firm,computer services export,delivery model,sector use cloud computing service,software service,use cloud computing service
    Date: 2020–07–17
  3. By: Rod Garratt; Michael Junho Lee
    Abstract: In a market where consumers choose between payment options and firms compete with products and prices, we show that payment data drives the formation of a market monopoly. A data-sharing policy can successfully restore and maintain a competitive market, but often at the expense of both efficiency and consumer welfare. The introduction of a low-cost anonymous means of electronic payment, or digital cash, preserves the market structure and improves consumers’ welfare by enabling them to monetize their private information. We discuss the potential role of central banks in providing digital cash.
    Keywords: customer data; privacy; market structure; digital cash; payments
    JEL: E42 L11 L15
    Date: 2021–01–01
  4. By: Paweł Sakowski (Quantitative Finance Research Group, Department of Quantitative Finance, Faculty of Economic Sciences, University of Warsaw); Daria Turovtseva
    Abstract: The aim of the paper is to check if cryptocurrency Bitcoin – a new investable asset class representative – is able to improve the performance of an optimal portfolio. Using two Markowitz criteria of optimization – expected return maximization and expected shortfall (CVaR) minimization – we test the investment opportunities after adding Bitcoin to the portfolio of 10 traditional assets (among them equity, fixed income, money, commodities and money market indices). Using daily observations from 1.05.2013 till 24.05.2019, we examine the behavior of the portfolios without and with Bitcoin and check if the return-risk ratio improves for the latter. Discussing the results, we conduct the sensitivity analysis by changing the lookback window (LB) and rebalancing frequency (RB) parameters. Empirical analysis suggests that Bitcoin-inclusive portfolios provide an investor with wider diversification opportunities. Robustness check confirms the findings and also advocates for the cryptocurrency to be added to the portfolio.
    Keywords: Portfolio optimization, portfolio theory, cryptocurrency, Bitcoin, Markowitz model, asset allocation, portfolio diversification, investment opportunities
    JEL: C20 C22 C61 C80 G14 G17
    Date: 2020
  5. By: Majid Bazarbash; Kimberly Beaton
    Abstract: Can fintech credit fill the credit gap in the consumer and business segments? There are few cross-country studies that explore this question. Focusing on marketplace lending, an important part of fintech credit, we use data for 109 countries from 2015 to 2017 to study the relationship between fintech credit to businesses and consumers and various aspects of financial development. Marketplace lending to consumers grows in countries where financial depth declines highlighting the role of fintech credit in filling the credit gap by traditional lenders. This result is particularly strong in low-income countries. In the business segment, marketplace lending expands where financial efficiency declines. Our findings show that low-income countries take advantage of the fintech credit opportunity in the consumer segment but face important challenges in the business segment.
    Keywords: Credit;Fintech;Financial sector development;Banking;Peer-to-peer lending;WP,marketplace lending,fintech lending,cross-country difference,balance sheet lending,consumer lending
    Date: 2020–08–07
  6. By: Zhiguo He (University of Chicago, Booth School of Business); Jing Huang (University of Chicago, Booth School of Business); Jidong Zhou (Cowles Foundation, Yale University)
    Abstract: Open banking facilitates data sharing consented by customers who generate the data, with a regulatory goal of promoting competition between traditional banks and challenger ï¬ ntech entrants. We study lending market competition when sharing banks’ customer data enables better borrower screening or targeting by ï¬ ntech lenders. Open banking could make the entire ï¬ nancial industry better off yet leave all borrowers worse off, even if borrowers could choose whether to share their data. We highlight the importance of equilibrium credit quality inference from borrowers’ endogenous sign-up decisions. When data sharing triggers privacy concerns by facilitating exploitative targeted loans, the equilibrium sign-up population can grow with the degree of privacy concerns.
    Keywords: Open banking, Data sharing, Banking competition, Digital economy, Winner's curse, Privacy, Precision marketing
    Date: 2020–11
  7. By: Jacques Fontanel (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes); N Suscheva
    Abstract: Originally conceived as a system of exchanges without borders, the Internet is a considerable geopolitical and economic stake in a world of potential conflict between the major powers. TikTok has become the political weapon of Generation Z, just as Huewei threatened the GAFAM monopoly. From entertaining, it became political. It has been at the heart of many humanitarian mobilisations. Between China and the USA, a Thucydide-style trap seems to be setting itself up. Donald Trump wanted to protect himself from the potential dangers of China for his national security with a digital iron curtain. It is interesting to note that the American technologies of the digital economy, much more powerful than those of China, could also be condemned by most countries in the world, on the same basis of possible effects of domination. The change of power in Washington will undoubtedly shed light on this situation by condemning or controlling a still Chinese TikTok on American territory.
    Abstract: Pré-publication Conçu à l'origine comme un système d'échanges sans frontières, Internet est un enjeu géopolitique et économique considérable dans un monde de conflit potentiel entre les grandes puissances. TikTok est devenue l'arme politique de la génération Z, comme Huewei menaçait le monopole des GAFAM. De divertissante, elle est devenue politique. Elle a été au coeur de nombreuses mobilisations humanitaires. Entre la Chine et les USA, un piège à la Thucydide semble se mettre en place. Donald Trump a voulu se prémunir des dangers potentiels de la Chine pour sa sécurité nationale avec un rideau de fer digital. Il est intéressant de noter que les technologies américaines de l'économie digitale, bien plus puissantes que celles de la Chine, pourraient aussi être condamnées par la plupart des pays au monde, sur les mêmes bases d'effets possibles de domination. Le changement de pouvoir à Washington va sans doute éclairer cette situation en condamnant ou en contrôlant un Tik Tok encore chinois sur le territoire américain.
    Keywords: Economic war,digital war,National security,USA-China conflict,Guerre économique,guerre digitale,sécurité nationale,conflit sino-américain
    Date: 2020–12–05
  8. By: Ozili, Peterson K
    Abstract: This paper analyse banking sector earnings management using loan loss provisions in the Fintech era. The findings show evidence for bank income smoothing using loan loss provisions. There is greater income smoothing in the second-wave Fintech era compared to the first-wave Fintech era, and the presence of strong institutions did not lower income smoothing in the second wave era. Bank income smoothing is also greater in (i) BIS and EU countries than in non-EU countries and G7 countries, (ii) well-capitalised banking sectors, and (iii) during economic booms, in the second wave Fintech era. The implication is that the competition for loans and deposits by banks and Fintech lenders in the second-wave Fintech era created additional incentives for banks to engage in income smoothing to report competitive and stable earnings
    Keywords: banking sector, income smoothing, regulatory quality, legal quality, market power, Fintech, nonperforming loans, earnings smoothing, loan loss provisions, earnings management, digital finance.
    JEL: G21 G23 M0 M4 M41 M42
    Date: 2021
  9. By: World Bank
    Keywords: Finance and Financial Sector Development - E-Finance and E-Security Finance and Financial Sector Development - Financial Structures Governance - E-Government Social Protections and Labor - Safety Nets and Transfers Social Protections and Labor - Social Protections & Assistance
    Date: 2019–07
  10. By: Seifried, Mareike; Jurowetzki, Roman; Kretschmer, Tobias
    Abstract: The emergence of online labor markets calls the validity of traditional career models into question. Given the volatility and digital nature of this environment, short-term employment relationships and heterogeneity of workers, employers and tasks in these markets, it is unclear how careers might unfold - whether they are largely random and accidental or whether there are distinct trajectories and patterns in online careers. We document dominant career paths and develop a taxonomy of novel career patterns in OLMs. This addresses recent calls for research to update and refine our theories and understanding of careers (Rahman et al., 2016). We adopt a quantitative-inductive approach to describe workers' careers in terms of their task and skill specialization. This helps us understand the different types of careers on a continuum between more stable and random, unsystematic careers. Our results provide an innovative way of thinking about career development in OLMs and open up several fruitful areas of future research.
    Keywords: online labor markets,platforms,gig economy,career theory,freelancing,labor specialization,human capital
    JEL: J24 J44 O30
    Date: 2020
  11. By: Prasanna Tambe; Lorin Hitt; Daniel Rock; Erik Brynjolfsson
    Abstract: General purpose technologies like information technology typically require complementary firm-specific investments to create value. These complementary investments produce a form of capital, which is typically intangible and which we call digital capital. We create an extended firm-level panel on IT labor investments (1990-2016) using data from LinkedIn. We then apply Hall’s Quantity Revelation Theorem to compute both prices and quantities of digital capital over recent decades. We find that 1) digital capital prices vary significantly over time, peaking around the dot-com boom in 2000, 2) significant digital capital quantities have accumulated since the 1990s, with digital capital accounting for at least 25% of firms’ assets by the end of our panel, 3) that digital capital has disproportionately accumulated in a small subset of “superstar” firms and its concentration is much greater than the concentration of other assets, and 4) that digital capital accumulation predicts firm-level productivity about three years in the future.
    JEL: D24 D25 M21 O32 O33
    Date: 2020–12
  12. By: Arnoud W.A. Boot; Peter Hoffmann; Luc Laeven; Lev Ratnovski
    Abstract: We study the effects of technological change on financial intermediation, distinguishing between innovations in information (data collection and processing) and communication (relationships and distribution). Both follow historic trends towards an increased use of hard information and less in-person interaction, which are accelerating rapidly. We point to more recent innovations, such as the combination of data abundance and artificial intelligence, and the rise of digital platforms. We argue that in particular the rise of new communication channels can lead to the vertical and horizontal disintegration of the traditional bank business model. Specialized providers of financial services can chip away activities that do not rely on access to balance sheets, while platforms can interject themselves between banks and customers. We discuss limitations to these challenges, and the resulting policy implications.
    Keywords: Financial services;Banking;Communications in revenue administration;Technological innovation;Financial statements;WP,bank,firm,customer,financial service,provider
    Date: 2020–08–07
  13. By: Gürtzgen, Nicole (Institute for Employment Research (IAB), Nuremberg); Lochner, Benjamin (University of Erlangen-Nuremberg); Pohlan, Laura (ZEW Mannheim and IAB Nuremberg); van den Berg, Gerard J. (University of Bristol)
    Abstract: This paper studies the effects of the high-speed internet expansion on the match quality of new hires. We combine data on internet availability at the local level with German individual register and vacancy data. Results show that internet availability has no major impact on the stability of new matches and their wages. We confirm these findings using vacancy data, by explicitly comparing match outcomes of online and non-online recruits. Further results show that online recruiting not only raises the number of applicants and the share of unsuitable candidates per vacancy, but also induces employers to post more vacancies.
    Keywords: matching, internet, informational friction, recruiting channel, vacancy, wage, job duration
    JEL: J64 H40 L96 C26
    Date: 2021–01
  14. By: Taubman, Antony
    Abstract: This paper charts the evolution and diversification of trade in knowledge that has taken place in the quarter-century since the WTO TRIPS Agreement came into force. Entirely new markets have come into being, potentially redefining the very character of 'trade'. The disruptive effect of digital technology has led to much of the content - formerly conceived of as 'added value' embedded in physical carrier media, traded and measured as 'goods' - can be traded in the form of specific licences that use IP rights covering the content that is increasingly accessed online in digital form. These new forms of exchange in valuable intangible content confront fundamental assumptions about the nature of trade and its interaction with the IP system, forcing a rethink of what constitutes the 'trade-related aspects' of intellectual property. The issues examined include the principle of territoriality of IP rights and the segmentation of markets according to national jurisdictions; the structuring of cross-border commercial exchanges into the two discrete categories of 'goods' and 'services'; the emerging disparity in regional trade agreements between provisions on digital IP standards and on digital products and e-commerce; and the significance of IP rights being treated as assets in investment treaties. Whatever formal or legal overlay is applied to these new trading arrangements - it is essential to understand that this is now trade in IP licences as such, rather than trade in goods that have an IP component as an adjunct or ancillary element. TRIPS came about at a time when economic growth theory incorporated intangible knowledge as an endogenous factor, rather than maintaining it as exogenous to models of growth. Trade policy must similarly work to incorporate an understanding of the trade in IP licences itself within cross-border commercial exchanges as an integral element of international trading relations: sale and licensing of IP rights can then be considered 'endogenous' to trade. This is essential for an accurate empirical picture of trade relations today, given the economic significance both of dispersed global value chains and of trade in 'pure' IP content as such particularly in the creative sectors.
    Keywords: intellectual property,trade in knowledge,digital trade,TRIPS Agreement
    JEL: F13 K10 K33 O30 O34 I18
    Date: 2020
  15. By: Harald Uhlig; Taojun Xie
    Abstract: The recent rise of digital currencies opens the door to their use in parallel alongside official currencies ("dollar'') for pricing and transactions. We construct a simple New Keynesian framework with parallel currencies as pricing units and sticky prices. Relative prices become a state variable. Exchange rate shocks can arise even without other sources of uncertainty. A one-time exchange rate appreciation for a parallel currency leads to persistent redistribution towards the dollar sector and dollar inflation. The share of the non-dollar sector increases when prices in the dollar sector become less sticky and when firms can choose the pricing currency.
    JEL: E30 E52
    Date: 2020–12
  16. By: Rim Krouk; Fernando Almeida
    Abstract: Society is undergoing many transformations and faces economic crises, environmental, social, and public health issues. At the same time, the Internet, mobile communications, cloud technologies, and social networks are growing rapidly and fostering the digitalization processes of business and society. It is in this context that the shared economy has assumed itself as a new social and economic system based on the sharing of resources and has allowed the emergence of innovative businesses like Airbnb. However, COVID-19 has challenged this business model in the face of restrictions imposed in the tourism sector. Its consequences are not exclusively short-term and may also call into question the sustainability of Airbnb. In this sense, this study aims to explore the sustainability of the Airbnb business model considering two theories which advocate that hosts can cover the short-term financial effects, while another defends a paradigm shift in the demand for long-term accommodations to ensure greater stability for hosts.
    Date: 2021–01
  17. By: Saito, Makoto
    Abstract: This paper discusses the possible macroeconomic consequences of the introduction of cryptocurrencies by central banks (so-called central bank cryptocurrencies or CBCCs) in a competitive equilibrium environment. In this setup, central banks set not only the money supply, but also the interest rate on CBCCs, whereas bond interest rates, the price level, and the exchange rates between CBCCs are determined in competitive markets. We first resolve a severe confrontation between the quantity theory of money (QTM) and the fiscal theory of the price level (FTPL) in that as long as the currency interest rate lies below the bond interest rate, the QTM is applicable in principle. However, once the bond interest rate (asymptotically) matches that of the currency, the FTPL takes the place of the QTM. We then investigate whether the introduction of CBCCs plays a role in the disappearance of strong money demand (currently present at near-zero interest rates in Japan) and its alternatives. We find that if a central bank sets the currency interest rate below a near-zero bond interest rate, then strong money demand disappears, and the massive issuance of long-term public bonds is no longer absorbed in currency markets. However, once the consolidated government succeeds in lowering the currency interest rate to be deeply negative, it can obtain immense seigniorage, allowing it to repay these public bonds. In addition, if the bond interest rate also falls, even below zero for long periods, then the government can exploit seigniorage from CBCC holders without limit.
    Date: 2020–12
  18. By: International Monetary Fund
    Abstract: The CBOB considers increased financial inclusion as a critical reform area. In this regard, the FSAP assessed developments in financial inclusion for individuals and enterprises (SME finance), retail payments and provides recommendations for improvements. A review of the market was undertaken using the Payment Aspects of Financial Inclusion (PAFI) framework covering areas such as the legal/regulatory framework and oversight, retail payment systems and instruments, access to transaction accounts and use cases, as well as SME policy, credit infrastructure, economic empowerment funds and consumer protection and financial literacy.
    Keywords: Banking;Credit;Payment systems;Financial services;Credit bureaus;ISCR,CR,transaction fee,venture capital fund,credit bureau,private sector
    Date: 2019–07–01
  19. By: Hull, Isaiah (Research Department, Central Bank of Sweden); Sattath, Or (Department of Computer Science); Diamanti, Eleni (LIP6, CNRS); Wendin, Göran (Department of Microtechnology and Nanoscience)
    Abstract: Research on quantum technology spans multiple disciplines: physics, computer science, engineering, and mathematics. The objective of this manuscript is to provide an accessible introduction to this emerging field for economists that is centered around quantum computing and quantum money. We proceed in three steps. First, we discuss basic concepts in quantum computing and quantum communication, assuming knowledge of linear algebra and statistics, but not of computer science or physics. This covers fundamental topics, such as qubits, superposition, entanglement, quantum circuits, oracles, and the no-cloning theorem. Second, we provide an overview of quantum money, an early invention of the quantum communication literature that has recently been partially implemented in an experimental setting. One form of quantum money offers the privacy and anonymity of physical cash, the option to transact without the involvement of a third party, and the efficiency and convenience of a debit card payment. Such features cannot be achieved in combination with any other form of money. Finally, we review all existing quantum speedups that have been identified for algorithms used to solve and estimate economic models. This includes function approximation, linear systems analysis, Monte Carlo simulation, matrix inversion, principal component analysis, linear regression, interpolation, numerical differentiation, and true random number generation. We also discuss the difficulty of achieving quantum speedups and comment on common misconceptions about what is achievable with quantum computing.
    Keywords: Quantum Computing; Econometrics; Computational Economics; Money; Central Banks
    JEL: C50 C60 E40 E50
    Date: 2020–12–01
  20. By: Wilson, Kyle; Xiao, Mo; Orazem, Peter F.
    Abstract: In a rapidly growing industry, potential entrants strategically choose which local markets to enter. Facing the threat of additional entrants, a potential entrant may lower its expectation of future profits and delay entry into a local market, or it may accelerate entry due to preemptive motives. Using the evolution of local market structures of broadband Internet service providers from 1999 to 2007, we find that the former effect dominates the latter after allowing for spatial correlation across markets and accounting for endogenous market structure. On average, it takes 2 years longer for threatened markets to receive their first broadband entrant. Moreover, this entry delay has long†run negative implications for the divergence of the U.S. broadband infrastructure: 1 year of entry delay translates into an 11% decrease on average present†day download speeds.
    Date: 2020–11–29
  21. By: Simplice A. Asongu (Yaounde, Cameroon); Alex Adegboye (Covenant University, Ogun State, Ota, Nigeria); Jeremiah Ejemeyovwi (Covenant University, Ogun State, Ota, Nigeria); Olaoluwa Umukoro (Covenant University, Ogun State, Ota, Nigeria)
    Abstract: This study assesses the relevance of mobile phone technology in complementing gender inclusive education (i.e. primary, secondary and tertiary) to promote public accountability (i.e. involving horizontal, vertical and diagonal accountability dynamics). The study utilizes the generalized method of moments (GMM) technique to establish the empirical evidence based on 48 Sub-Saharan African countries for the period 2005-2018. The following findings are documented from the linkages between mobile phone technology, inclusive education and public accountability. First, the interactions between mobile phone technology and inclusive education promote public accountability. Second, with regard to net effects, while unexpected negative signs are established, the corresponding positive interactive effects indicate that enhancing the penetration of mobile phone technology beyond some critical thresholds ensures positive net effects. Hence, policy makers should ensure that mobile phone technology penetration exceeds the established thresholds in order for gender inclusive education to positively affect public accountability.
    Keywords: Mobile phone technology, educational quality, public accountability, Africa
    Date: 2021–01
  22. By: Jan Kregel
    Abstract: While governments may consider implementation of John Maynard Keynes's original clearing union proposal for the international financial architecture too difficult or radical, Senior Scholar Jan Kregel notes that the private sector has already produced a virtual equivalent of an international global monetary system. Currently, this system is employed as an extension of the international mobile telephone services provided by a private company, rather than a financial institution. The clearing system he describes provides an example of a possible solution that retains national currencies without requiring the substitution of the dollar with another national currency or basket of national currencies.
    Date: 2021–01
  23. By: Paweł Sakowski (Quantitative Finance Research Group, Department of Quantitative Finance, Faculty of Economic Sciences, University of Warsaw); Anna Turovtseva
    Abstract: The aim of the paper is to reveal if the classical approach for asset allocation can be reflected on an innovative market of cryptocurrencies. Markowitz rebalanced portfolio technique is employed for this purpose. The filtering of coins for optimization is done on the whole scope of cryptocurrencies available for the time horizon of the study and only 52 coins get into the portfolio at least once. There are four primary strategies produced within a set of assumed optimization parameters together with four benchmarks for each. The benchmarks are Bitcoin buy-and-hold, S&P500 buy-and-hold, equally weighted portfolio and portfolio weighted by market capitalization. While looking at the performance measures, it is concluded that Markowitz strategies outperform their benchmarks for every set of parameters. The results of the sensitivity analysis suggest that there is a big potential in finding profitable strategy of investment on cryptocurrencies. The change of parameters: look-back period, rebalancing window, transaction cost as well as optimization objective impact the strategies performance significantly. Eventually, there appear a strategy in the sensitivity analysis, which performs better than the primary ones due to the prolonged parameters of look-back period and rebalancing window.
    Keywords: Portfolio analysis, Markowitz framework, cryptocurrencies, investment strategies, asset allocation
    JEL: C20 C22 C61 C80 G14 G17
    Date: 2020
  24. By: Kislev, Mickey M.; Kislev, Shira
    Abstract: The study analyzes the diffusion of electronic cigarettes as an innovation, as well as how industry, society, and the individual affect its market dynamics. The study is based on five surveys conducted during the years 2017−2019, and including participants of all ages (age 12 to 80 and beyond). The article describes indicators for evaluating the sustainability of a really-new product like electronic cigarettes, following the market trajectory of this product as it sets its dominant design and shapes the use-system for the product type from now onward. This process has two phases: trial and adoption. The probability of each nicotine product type’s adoption is different, depending on the prevalence of trials of that product among the population. The results of e-cigarette trials and additional indicators reveal the point (critical mass-point) where social influence outweighs rational evaluation by the individual regarding nicotine products. By using triers’ prevalence as the indicator for measuring an entry of really-new product into the market, the authors could identify the sustainability of that really-new product at a much early phase. Therefore, the prevalence of triers can be used as a predictor for the diffusion rate of an innovative product in a certain population and should be measured. The authors also propose a regression model that estimates the prevalence of triers based on the extent of users in the population.
    Keywords: demerit good, electronic cigarette, innovation, diffusion, nicotine
    JEL: L66 M31 O33 Z13
    Date: 2020–10–25
  25. By: John Kiff; Jihad Alwazir; Sonja Davidovic; Aquiles Farias; Ashraf Khan; Tanai Khiaonarong; Majid Malaika; Hunter K Monroe; Nobu Sugimoto; Hervé Tourpe; Peter Zhou
    Abstract: This paper examines key considerations around central bank digital currency (CBDC) for use by the general public, based on a comprehensive review of recent research, central bank experiments, and ongoing discussions among stakeholders. It looks at the reasons why central banks are exploring retail CBDC issuance, policy and design considerations; legal, governance and regulatory perspectives; plus cybersecurity and other risk considerations. This paper makes a contribution to the CBDC literature by suggesting a structured framework to organize discussions on whether or not to issue CBDC, with an operational focus and a project management perspective.
    Keywords: Central Bank digital currencies;Banking;Currencies;Payment systems;Digital currencies;WP,CBDC issuance,CBDC arrangement,CBDC holding,cyber-security payment,monetary policy
    Date: 2020–06–26
  26. By: Koppe, Timo; Wahl-Islam, Nihal
    Date: 2021–01–05
  27. By: Croitor, Evgheni; Werner, Dominick; Benlian, Alexander
    Date: 2021–01–05
  28. By: Pratap Singh (Institute for Social and Economic Change)
    Abstract: Demonetisation is a process in which the government withdraws legal tender status of currency issued by it. The first demonetisation happened on 12th January, 1946 and the second on 16th January, 1978. The demonetisation 2016 is the third such decision which took place on 8th November, 2016, in which Rs. 1000 and Rs. 500 currency was demonetised, which was 86 per cent of the total currency under circulation. The present study attempts to understand the scope and reasons of demonetisation and its impact on various sectors of the economy and on taxation. The study is descriptive in nature and uses secondary data taken from various sources like the Reserve Bank of India, Ministry of Finance and other sources. The study concludes that demonetisation had both positive and negative impacts.
    Keywords: Demonetisation; Indian economy; Taxation
    Date: 2019
  29. By: Lalouette, Laure; Zamora-Pérez, Alejandro; Rusu, Codruta; Bartzsch, Nikolaus; Politronacci, Emmanuelle; Delmas, Martial; Rua, António; Brandi, Marco; Naksi, Martti
    Keywords: banknotes, currency substitution, euro, euroisation, foreign demand for money, hoarding, remittances
    Date: 2021–01
  30. By: Linda Schilling; Jesús Fernández-Villaverde; Harald Uhlig
    Abstract: A central bank digital currency, or CBDC, may provide an attractive alternative to traditional demand deposits held in private banks. When offering CBDC accounts, the central bank needs to confront classic issues of banking: conducting maturity transformation while providing liquidity to private customers who suffer “spending” shocks. We analyze these issues in a nominal version of a Diamond and Dybvig (1983) model, with an additional and exogenous price stability objective for the central bank. While the central bank can always deliver on its nominal obligations, runs can nonetheless occur, manifesting themselves either as excessive real asset liquidation or as a failure to maintain price stability. We demonstrate an impossibility result that we call the CBDC trilemma: of the three goals of efficiency, financial stability (i.e., absence of runs), and price stability, the central bank can achieve at most two.
    Keywords: central bank digital currency, monetary policy, bank runs, financial intermediation, inflation targeting, CBDC trilemma
    JEL: E58 G21
    Date: 2020
  31. By: Xuyang Li; Tongping Li; Hui Li; Junmei Qi (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine); Linjie Hu
    Abstract: With the development of e-commerce, online consumption-a new sustainable consumption mode-has rapidly developed. Online shopping has become an important consumption method for Chinese residents, and the era of online consumption has arrived. Urbanization is an important foundation for the development of online consumption, and its impact on online consumption is becoming increasingly important. In addition, with the decline of fertility in China, the proportion of the elderly population is increasing. As the macro background of the current economic operation of China, population aging has long been a concern of the government. However, the existing research on urbanization, population aging and online consumption is insufficient. In this context, this study is of great significance to promote the sustainable development of the online consumption mode and enrich the theory of resident consumption in the era of the network economy. In this paper, by adopting the system generalized method of moments (GMM), we conducted an empirical analysis of the relationship between urbanization, population aging, and online consumption, based on panel data from 31 provinces in China from 2007 to 2017. Furthermore, we examined the regional heterogeneity of urbanization's online consumption effect. The results reveal that, first, urbanization has a positive relationship with online consumption. Second, urbanization's online consumption effect has regional differences, with the largest positive effect being in the western area of China, the second in the eastern area of China and the smallest in the central area of China. Third, aging inhibits the development of online consumption. Specifically, it mainly includes two aspects. On the one hand, aging has a direct negative impact on online consumption. On the other hand, aging has a moderating effect on urbanization's online consumption effect, which weakens the impact of urbanization. The rising of urban residents' income has significant explanatory power to the change of online consumption in the eastern and western regions. Therefore, the policy implications are as follows: promoting the strategic transformation of urbanization, giving full play to the online consumption effect of urbanization; adjusting and improving population policy to cope with the population aging; constantly raising people's income level and enhancing consumption potential.
    Keywords: population aging,moderating effect,online consumption,urbanization
    Date: 2019–08
  32. By: Carol Alexander; Jun Deng; Bin Zou
    Abstract: We consider a futures hedging problem subject to a budget constraint that limits the ability of a hedger with default aversion to meet margin requirements. We derive a semi-closed form for an optimal hedging strategy with dual objectives -- to minimize both the variance of the hedged portfolio and the probability of forced liquidations due to margin calls. An empirical analysis of bitcoin shows that the optimal strategy not only achieves superior hedge effectiveness, but also reduces the probability of forced liquidations to an acceptable level. We also compare how the hedger's default aversion impacts the performance of optimal hedging based on minute-level data across major bitcoin spot and perpetual futures markets.
    Date: 2021–01

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.