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New Technology Spillovers into the Payment System

Milton H. Marquis and Kevin L. Reffett
The Economic Journal
Vol. 104, No. 426 (Sep., 1994), pp. 1123-1138
Published by: Wiley on behalf of the Royal Economic Society
DOI: 10.2307/2235068
Stable URL: http://www.jstor.org/stable/2235068
Page Count: 16
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
New Technology Spillovers into the Payment System
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Abstract

In modern economies, multiple means of payment associated with the exchange of goods coexist. This paper examines one such payment system in an economy with endogenous technological change. It consists of money and a costly accounting system that receives spillovers from new technologies. Positive nominal interest rates are shown to produce welfare losses by inducing a reallocation of human capital into the payment system, and out of the production of final goods and new knowledge. The former substitution produces level effects on output and the latter produces growth effects. At higher levels of inflation, these marginal effects are seen to be weaker.

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