DeMon a massive, draconian monetary shock

Demonetisation was a massive, draconian monetary shock and it clearly impacted GDP growth, former chief economic adviser Arvind Subramanian has said in his new book.

“Growth had been slowing even before but after demonetisation, the slide accelerated,” Subramanian says in his upcoming book ‘Of Counsel: The Challenges of the Modi-Jaitley Economy’. Subramanian, CEA at the time of note ban, says he does not think anyone disputes demonetisation slowed growth. “Rather, the debate has been about the size of the effect, whether it was 2 percentage points or much less,” he says, while adding that as a monetary economist what was striking for him was how small the effect was compared to the magnitude of the shock on the overall economy.

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