Publication:

Welfare analysis in a cashless economy

The use of money can involve either an electronic adjustment or the exchange of cash . Phasing out cash has costs such as the disruption of privacy and the loss of seigniorage revenues, and benefits such as less criminal activities , reduction of tax evasion and an unconstrained monetary policy at the Zero Lower Bound . Nowadays, new technologies are challenging the use of cash, which implies rethinking the role of money to facilitate transactions. This paper makes a welfare analysis using a Real Business Cycle model with money to find the optimal share of electronic money . Additionally, the effects of tax evasion, transaction costs and the long

run inflation rate are estimated .