ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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The COVID-19 Case

Paradox of a Supply Constrained Keynesian Equilibrium

The Indian economy, which was facing demand defi ciency and slowdown prior to the Covid-19 outbreak, plunged further with the lockdown. The present exercise represents the current problem as a typical demand constrained Keynesian equilibrium, affl icted further by demand and supply failures generated by transaction costs. The resulting scenario resembles a “supply constrained” Keynesian equilibrium. The article looks at the possible impact on prices and discusses the implications of select policy interventions for such an economy.



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Updated On : 1st Jun, 2020

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