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Demonetisation hit GDP by 2% points, says a research paper by leading economist Gita Gopinath

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Demonetisation hit GDP by 2% points says a brief by leading economist Gita Gopinath
Source: ThePrint

In a research paper co-authored by her, leading economist Gita Gopinath says that the Indian government’s decision of demonetisation affected the country’s economic growth by at least 2% points in the Q4(October-December) of 2016.

The paper titled, Cash And The Economy: Evidence From India’s Demonetisation later talks about the severe implications the note-ban exercise had to the Indian economy through lower credit growth and a decrement in the economic activity.

The research paper claimed that it was demonetisation which resulted in the downfall of economic activity by at least 2 percentage points. It also noted a 3 percentage points decline in the employment generation in the months November and December of 2016, including a downhill in the nightlights related economic activities. The paper published is by National Bureau of Economic Research and relies on a household survey of employment.

On November 8, 2016, Prime Minister Narendra Modi had announced a ban on Rs 500 and Rs 1000 currency notes, aiming to curb terror funding and black money.

Ms Gopinath, now a US citizen, was born in Mysuru, Karnataka. She studied at the Delhi School of Economics and holds a PhD in economics from Princeton University. She joined the University of Chicago in 2001 as an Assistant Professor before moving to Harvard in 2005. Later, she became a tenured Professor there in 2010.

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Gita was previously working as a co-director of the International Finance and Macroeconomics Program at the National Bureau of Economic Research. She was also the co-editor of The American Economic Review and the current Handbook of International Economics.

Interestingly, Gita is a member of the economic advisory panel of the Federal Reserve Bank of New York as well as the Economic Adviser to the Chief Minister of Kerala.

In 2014, Gita was named as one of the top 25 economists under 45 by International Monetary Fund.

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