2019 |
Volume 55 |
Issue Issue 1
Demonetization Impeded Indian Economic Growth - Test of Hawtreys Theory of Business Cycles
1.
Nitin Arora
– Senior Research Fellows (net/ugc), Department Of Economics, Panjab Univ., Chandigarh.
2.
Sumanpreet Kaur
– Senior Research Fellows (net/ugc), Department Of Economics, Panjab Univ., Chandigarh.
3.
Ramandeep Kaur
– Senior Research Fellows (net/ugc), Department Of Economics, Panjab Univ., Chandigarh.
Received
16-Jul-2019
|
Accepted
-
|
Published
16-Jul-2019
|
Abstract
Many national and international
agencies blame demonetization
as a major factor behind
the deceleration in the growth
rate of Indian economy in recent
quarters. Such linkages of
economic growth with monetary
shocks have been well explained
by Hawtrey’s monetary
theory of business cycles. The
present paper attempts to test
Hawtrey’s theory in the context
of demonetization in India. The
results indicate that the Indian
economy did experience fourteen
growth-rate cycles over the
period 1970 to 2017. Given that
M3 takes an average 7 months
lead in explaining the low
growth (i.e., downswing) phase,
the demonetization (i.e., fall in
money supply) can be admitted
as a lead because of falling
growth rate of Indian economy.
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