Abstract
In the backdrop of the demonetization move by the Government of India, this paper proposes a model of optimal currency holding when there is a possibility of currency withdrawal. Our results indicate that if the perceived probability of withdrawal of higher denomination currency is very high, then agents would eventually hold cash in lower denomination currency only, thereby making the higher currency notes redundant. Thus, one of the targets of demonetization, which is less holding of higher currency notes, can be achieved without actually implementing demonetization.
Highlights
A Simple Model of Currency Notes WithdrawalHow to cite this paper: Chattopadhyay, S. and Sahu, S. (2018) A Simple Model of Currency Notes Withdrawal
In the evening of November 8, 2016, the Prime Minister of India made a sudden, unanticipated and rare economic policy move when he announced that the currency notes of higher denomination i.e. Rs.500 and Rs.1000, would be rendered invalid at the stroke of the midnight
In the backdrop of the demonetization move by the Government of India, this paper proposes a model of optimal currency holding when there is a possibility of currency withdrawal
Summary
How to cite this paper: Chattopadhyay, S. and Sahu, S. (2018) A Simple Model of Currency Notes Withdrawal. How to cite this paper: Chattopadhyay, S. and Sahu, S. (2018) A Simple Model of Currency Notes Withdrawal. Received: September 27, 2018 Accepted: October 23, 2018 Published: October 26, 2018
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
