A great analysis of a bizarre policy.
Larry White and Shruti Rajagopalan have a superb piece highlighting the Cantillon effects of demonetisation.
The Cantillon effects are named after 18th Century economist Richard Cantillon. But then who reads history or cares for it. Under this, monetary policy transfers the purchasing power from those having old notes to those who get the new notes. This will lead to disproportionate rise in prices among different goods in an economy:
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