ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Informal Credit Markets, Black Money and Monetary Policy-Some Analytical and Empirical Issues

Informal Credit Markets, Black Money and Monetary Policy Some Analytical and Empirical Issues K Sundaram V Pandit In a recent paper Acharya and Madhur have sought to examine whether and how far the presence of informal credit markets and black money frustrates monetary policy. They reach the conclusion that "contrary to a view held in some circlesf official monetary-credit policy has on the informal credit market". The' some circles', presumably refers, inter alia, to an earlier paper by the present authors wherein, while discussing the implications of the large volume of liquid wealth arising from cumulation of savings out of black income, they noted that "this liquidity is immune to any monetary fiscal policy", which is quoted by Acharya and Madhur, but also went on to state that "it can move round in the economy creating unpredictable excess demand in several vulnerable sectors of the economy''.

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