| Abstract: | This paper attempts to assess the effect of the growth in the use of credit cards upon aggregate household money holdings. In an inventory theoretic structure, when individuals have the choice of whether to use a credit card as an alternative means of payments, and with a given income distribution, the aggregate money demand relation is derived. It is shown that the existence of an alternative means of payment changes the predictions on the relevant elasticities from the standard model, and makes them variable over time, and gives some indication of how credit card growth causes shifts in aggregate money demand. |
