In November 2016, India’s prime minister announced that all bills over 500 rupees were demonetized in an attempt to fight corruption. As a result, 86% of India’s currency disappeared overnight! Harvard’s Gabriel Chodorow-Reich and his coauthors took advantage of this sudden natural experiment to examine the role of money in modern economies.

Different districts of India took different approaches to demonetization—some replaced the currency quickly while others took longer. But studying the various effects was difficult because of a lack of reliable data.

By using employment surveys—simply measuring whether people are working—and satellite-based night light activity—measuring how much light is being generated in a particular location—Chodorow-Reich and his team were able to compare economic outcomes across regions with a high degree of accuracy.

This video is based on the following paper: Cash and the Economy: Evidence from India's Demonetization by Gabriel Chodorow-Reich, Gita Gopinath, Prachi Mishra, and Abhinav Naraynan. https://scholar.harvard.edu/chodorow-reich/publications/cash-and-economy-evidence-indias-demonetization

More of Gabriel Chodorow-Reich’s work: https://scholar.harvard.edu/chodorow-reich

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Special thanks to:
Bharatiya Janata Party
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