Ulf von Kalckreuth

Publications (2)0 Total impact

• Article: Using Cash to Monitor Liquidity - Implications for Payments, Currency Demand and Withdrawal Behavior

  Ulf Von Kalckreuth, Tobias Schmidt, Helmut Stix
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  ABSTRACT: Standard transaction cost arguments can only partially explain why the share of cash transactions is still high in many countries. This paper shows that consumers’ desire to monitor liquidity is one of the reasons. Consumers make use of a distinctive feature of cash – a glance into one’s pocket provides a signal for both the remaining budget as well as the level of past expenses. We propose a theoretical framework which incorporates this feature of cash, and derives implications not only for cash usage as such but also for a broader set of payment-related activities. Survey data from Germany on consumers’ payment and withdrawal patterns are used to test these implications empirically. The data are consistent with all theoretical predictions: consumers who need to keep control over their remaining liquidity and who have elevated costs of information processing and storage will conduct a larger percentage of their payments using cash, hold fewer non-cash payment instruments, withdraw less often and hold larger cash balances than other consumers. Such consumers also use payment cards for some transactions; they switch to non-cash payment instruments only at higher transaction values than other consumers, however. Our model provides an explanation of why cash usage has declined only slowly in some countries despite broad diffusion of non-cash means of payment.
  Household Finance eJournal. 11/2011;
• Source

  Available from: SSRN

  Article: Choosing and using payment instruments: evidence from German microdata

  Ulf von Kalckreuth, Tobias Schmidt, Helmut Stix
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  ABSTRACT: This paper constructs a model of saving for retired single people that includes heterogeneity in medical expenses and life expectancies, and bequest motives. We estimate the model using Assets and Health Dynamics of the Oldest Old data and the method of simulated moments. Out-of-pocket medical expenses rise quickly with age and permanent income. The risk of living long and requiring expensive medical care is a key driver of saving for many higher-income elderly. Social insurance programs such as Medicaid rationalize the low asset holdings of the poorest but also benefit the rich by insuring them against high medical expenses at the ends of their lives. (c) 2010 by The University of Chicago. All rights reserved..
  European Central Bank, Working Paper Series. 01/2009;