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India's Demonetization: Purging Black Money?
內容大綱
On November 8, 2016, the Indian prime minister announced that in an effort to counter corruption, black money, and counterfeiting, high-value currency notes of ?500 and ?1,000 denominations would be withdrawn from circulation. The currency to be removed in the demonetization exercise was worth ?15.4 trillion, or 86.9 per cent of the total value of currency in circulation. The old currency would be replaced with new ?500 and ?2,000 notes, but the transition would limit cash liquidity for 50 days in the Indian economy, which was heavily dependent on cash to facilitate both consumption and production. How would this process affect India, which had been identified as the world’s fastest-growing economy? Would demonetization have the desired effect of purging the economy of black money and moving India toward a cashless economy with increased growth? Or would it simply bring India’s remarkable growth story to a grinding halt and discourage investments?
學習目標
The case can be used in a postgraduate or MBA general management course dealing with the business environment, government, and the international economy. After completion of the case, students will be able to<ul><li>understand unconventional monetary policies such as demonetization;</li><li>understand the rationale for demonetization;</li><li>evaluate the effectiveness of demonetization in reducing black money; and</li><li>assess the macroeconomic consequences of demonetization on growth, using the Investment Saving–Liquidity Preference Money Supply (IS-LM) model.</li></ul>