We present a dynamic cash-management model where agents choose whether to pay with cash or credit at every point in … time. In the model credit usage depends on the current stock of cash, a novel result that matches recent micro evidence on … household's payment choices. The optimality of such decision rule is novel and cannot be obtained by models where cash-credit …

can choose to pay with either cash or credit. This framework predicts that the current level of the stock of cash … determines whether the agent uses cash or credit. Cash is used whenever the agent has enough of it, credit is used when cash … average share of expenditures paid in cash depend on the opportunity cost of cash relative to the cost of credit. The model …

can choose to pay with either cash or credit. This framework predicts that the current level of the stock of cash … determines whether the agent uses cash or credit. Cash is used whenever the agent has enough of it, credit is used when cash … average share of expenditures paid in cash depend on the opportunity cost of cash relative to the cost of credit. The model …