Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110042
Authors: 
Sen, Sunanda
DasGupta, Zico
Year of Publication: 
2014
Series/Report no.: 
Working Paper, Levy Economics Institute 813
Abstract: 
The implementation of economic reforms under new economic policies in India was associated with a paradigmatic shift in monetary and fiscal policy. While monetary policies were solely aimed at "price stability" in the neoliberal regime, fiscal policies were characterized by the objective of maintaining "sound finance" and "austerity". Such monetarist principles and measures have also loomed over the global recession. This paper highlights the theoretical fallacies of monetarism and analyzes the consequences of such policy measures in India, particularly during the period of the global recession. Not only did such policies pose constraints on the recovery of output and employment, with adverse impacts on income distribution; but they also failed to achieve their stated goal in terms of price stability. By citing examples from southern Europe and India, this paper concludes that such monetarist policy measures have been responsible for stagnation, with a rise in price volatility and macroeconomic instability in the midst of the global recession.
Subjects: 
Austerity
Development Expenditures
Exchange Rate Volatility
Fiscal Deficit
Fiscal Policy
FRBMA
Inflation
Interest Payments
Interest Rates
Monetarism
Monetary Policy
Sound Finance
JEL: 
E12
E31
E44
E50
E51
E52
E58
E62
E64
Document Type: 
Working Paper

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