Black Money and Demonetisation
24 Pages Posted: 14 Nov 2016
Date Written: November 14, 2016
The Government of India announced that the Rs 500 and Rs. 1000 denominated currency notes will cease to be legal tender. The move was targeted towards tackling black money, corruption and terrorism. After initial euphoria, questions began to emerge. What are the costs of this demonetization? Will it be effective if people can still create new black money thereafter? Will it increase the GDP? Will it increase inflation? What about tax revenues? We look for answers.
Keywords: Demonetisation, Black money, shadow economy, underground economy
JEL Classification: E3, E4, E5
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