The following graph represents the behavior of currency in circulation in India over the past two years following the demonetization announcement on November 8, 2016. The giant dip you notice is immediately following the announcement that rendered Rs. 500 and Rs. 1000 currency notes illegal. They contributed 86% of currency in circulation at the time. It took about two years for the currency in circulation to be back at the pre- demonetization level.
Daily Archives: September 8, 2018
I reviewed the book Monetary Policy in India: A Modern Macroeconomic Perspective edited by Chetan Ghate and Kenneth M Kletzer, Springer, 2016 for EPW recently.
Overall, the articles in the book represent a significant and substantial contribution to the literature on monetary policy of India- definitely from the point of view of application of dynamic macroeconomic models to the policy environment of a typical developing economy.