alternative means of payment such as credit cards. The main feature of the model is that cash circulates between economic … activities where the substitutability between cash and other means of payment is uneven. Our model predicts that, once credit … expands beyond a certain level, agents adjust their cash management practices in response to further credit expansions …

for the U.K. Thereby, we explicitly disentangle credit supply and demand and allow the interest rate charged on loans to …