Who Gained from India's Demonetization? Insights from Satellites and Surveys

Areendam Chanda and Justin Cook ()

Departmental Working Papers from Department of Economics, Louisiana State University

Abstract: On November 8, 2016, the Indian government abruptly demonetized 86-percent of its currency in circulation in an attempt to reduce black money, corruption, and counterfeiting. Yet, 99-percent of the currency was eventually returned to banks. We exploit large regional variations in deposit growth as a result of demonetization to study the medium term e?ects of this policy. Using night-light data, we show that districts which experienced higher deposit growth during the demonetization period, recorded higher levels of economic activity in the year and a half that followed. We estimate a one standard deviation increase in deposits is associated with a 5-percent increase in district GDP per capita. Further, districts with larger rural population, agricultural and non-agricultural informal labor shares also recorded an increase in nighttime light activity. The results are also supported by household level surveys on income and expenditures.

Date: 2019-05
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.lsu.edu/business/economics/files/workingpapers/pap19_06.pdf (application/pdf)

Related works:
Working Paper: Who Gained from India’s Demonetization? Insights from Satellites and Surveys (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lsu:lsuwpp:2019-06

Access Statistics for this paper

More papers in Departmental Working Papers from Department of Economics, Louisiana State University Contact information at EDIRC.
Bibliographic data for series maintained by ().