Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
The Great Indian Demonetization
Journal of Economic Perspectives
vol. 34,
no. 1, Winter 2020
(pp. 55–74)
(Complimentary)
Abstract
On November 8, 2016, India demonetized 86 percent of its currency in circulation. The stated objectives of the move were to seize undeclared income, to destroy counterfeit currency, to speed up formalization of the economy, and to increase the tax base. I find that the evidence over the subsequent three years suggests that the move had limited success in achieving its stated objectives. Disaggregated data suggests that demonetization did have appreciable costs in terms of lost jobs and output. However, the output costs appear to have been temporary.Citation
Lahiri, Amartya. 2020. "The Great Indian Demonetization." Journal of Economic Perspectives, 34 (1): 55–74. DOI: 10.1257/jep.34.1.55Additional Materials
JEL Classification
- E42 Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
- E62 Fiscal Policy
- O11 Macroeconomic Analyses of Economic Development
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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