Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171962
Authors: 
Huynh, Kim P.
Schmidt-Dengler, Philipp
Smith, Gregor W.
Welte, Angelika
Year of Publication: 
2017
Series/Report no.: 
Bank of Canada Staff Working Paper 2017-8
Abstract: 
The discrete choice to adopt a financial innovation affects a household's exposure to inflation and transactions costs. We model this adoption decision as being subject to an unobserved cost. Estimating the cost requires a dynamic structural model, to which we apply a conditional choice simulation estimator. A novel feature of our method is that preference parameters are estimated separately, from the Euler equations of a shoppingtime model, to aid statistical efficiency. We apply this method to study ATM card adoption in the Bank of Italy's Survey of Household Income and Wealth. There, the implicit adoption cost is too large to be consistent with standard models of rational choice, even when sorted by age, cohort, education or region.
Subjects: 
Bank notes
Econometric and statistical methods
Financial services
JEL: 
E41
D14
C35
Document Type: 
Working Paper

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