IESET.
Hypotheses·growth·india_extra_demonetisation_2016_economic_effect

India's November 2016 demonetisation (sudden withdrawal of 86% of currency in circulation by value, INR500 and INR1000 notes) produced a measurable short-run output contraction visible in quarterly real GDP growth and a persistent negative effect on the cash-intensive informal-sector through 2017-2018, with no offsetting medium-run benefit on tax-revenue / GDP or formalisation indicators by 2019.

Real GDP growth in the four quarters following demonetisation (2016Q4-2017Q3) is at least 1 percentage point per year below the pre-shock 2015Q1-2016Q3 trend.

PARTIALengine/runs/india_extra_demonetisation_2016_economic_effect

PARTIAL — shape=pre_post, sign matches but magnitude below threshold; |Δ_log|=0.0932; threshold 86.0%, observed 9.3%

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

The evidence is suggestive but not decisive. shape=pre_post, sign matches but magnitude below threshold; |Δ_log|=0.0932; threshold 86.0%, observed 9.3%

why it matters

Growth claims can look convincing in single success stories. This test asks whether the pattern survives a broader comparison.

how the test works

It compares 1 country or place units from 2010 to 2019, using a descriptive design.

what was measured
What changed
  • Post demonetisation indicator
What we checked
  • Real income growth
  • Real income pc growth
  • Tax revenue pct income
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/india_extra_demonetisation_2016_economic_effect
1007550250201020152019IND
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show real_gdp_growth across 1 sampled countries over 2010–2019.
The shapes above are stylised — none of the lines are real data.
Placeholder for india_extra_demonetisation_2016_economic_effect. Published chart will be generated from engine/runs/india_extra_demonetisation_2016_economic_effect/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-04-30T10:28:11Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

India's November 2016 demonetisation (sudden withdrawal of 86% of currency in circulation by value, INR500 and INR1000 notes) produced a measurable short-run output contraction visible in quarterly real GDP growth and a persistent negative effect on the cash-intensive informal-sector through 2017-2018, with no offsetting medium-run benefit on tax-revenue / GDP or formalisation indicators by 2019. Real GDP growth in the four quarters following demonetisation (2016Q4-2017Q3) is at least 1 percentage point per year below the pre-shock 2015Q1-2016Q3 trend.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

PRIMARY (dispositive): SUPPORTED if real GDP growth in fiscal year 2016-17 (which contains the demonetisation shock) is at least 0.5pp below the 2014-15 / 2015-16 mean AND fiscal year 2017-18 growth is at least 0.3pp below that same mean. REFUTED if either fiscal year's growth EXCEEDS the pre-period mean. INFORMATIVE (not gating): tax-revenue / GDP for IND should NOT rise by more than 1pp from 2015 to 2019 (no fiscal payoff).

formal test & threshold
test:      india_demonetisation_2016_growth_dip_no_payoff
threshold: PRIMARY: gdp_growth(IND, 2016-17) <= mean(gdp_growth, 2014-15, 2015-16) - 0.005 AND gdp_growth(IND, 2017-18) <= mean(gdp_growth, 2014-15, 2015-16) - 0.003. METHOD_VALID: WDI NY.GDP.MKTP.KD.ZG and GC.TAX.TOTL.GD.ZS available for IND through 2019.

Method

Template
descriptive
Clustering
none
Sample
1 countries · 2010 – 2019
Evidence type
descriptive

Pre-post structural break around 2016-11-08. Annual series smooths the within-year shock; primary test is on FY2016-17 and FY2017-18 growth rates vs the FY2014-15 / FY2015-16 mean.

Data

VariableSourceTransform
real_gdp_growth
outcome
world_bank_wdi:NY.GDP.MKTP.KD.ZGtier 2
level
real_gdp_pc_growth
outcome
world_bank_wdi:NY.GDP.PCAP.KD.ZGtier 2
level
tax_revenue_pct_gdp
outcome
world_bank_wdi:GC.TAX.TOTL.GD.ZStier 2
level
household_consumption_growth
outcome
world_bank_wdi:NE.CON.PRVT.KD.ZGtier 2
level
post_demonetisation_indicator
treatment
constructed:indicator = 1 for IND, year >= 2016 (Nov 2016 shock)tier 5
indicator

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — india_extra_demonetisation_2016_economic_effect

Verdict: PARTIAL — shape=pre_post, sign matches but magnitude below threshold; |Δ_log|=0.0932; threshold 86.0%, observed 9.3%

Pre-registration

  • Claim: India's November 2016 demonetisation (sudden withdrawal of 86% of currency in circulation by value, INR500 and INR1000 notes) produced a measurable short-run output contraction visible in quarterly real GDP growth and a persistent negative effect on the cash-intensive informal-sector through 2017-2018, with no offsetting medium-run benefit on tax-revenue / GDP or formalisation indicators by 2019. Real GDP growth in the four quarters following demonetisation (2016Q4-2017Q3) is at least 1 percentage point per year below the pre-shock 2015Q1-2016Q3 trend.
  • Falsification rule: PRIMARY (dispositive): SUPPORTED if real GDP growth in fiscal year 2016-17 (which contains the demonetisation shock) is at least 0.5pp below the 2014-15 / 2015-16 mean AND fiscal year 2017-18 growth is at least 0.3pp below that same mean. REFUTED if either fiscal year's growth EXCEEDS the pre-period mean. INFORMATIVE (not gating): tax-revenue / GDP for IND should NOT rise by more than 1pp from 2015 to 2019 (no fiscal payoff).
  • Falsification test: india_demonetisation_2016_growth_dip_no_payoff

Comparison

  • shape: pre_post
  • country: IND
  • cut_year: 2016
  • pre_mean: 10.493031274706302
  • post_mean: 11.517536715502033
  • delta: 1.0245054407957301
  • log_delta: 0.09315945692239236
  • n_pre: 6
  • n_post: 3

Extracted threshold: {'percent': 86.0}

Variables resolved

  • world_bank_wdi:GC.TAX.TOTL.GD.ZS → tax_revenue_pct_gdp (outcome, publisher=world_bank_wdi, n=5577)
  • world_bank_wdi:NE.CON.PRVT.KD.ZG → household_consumption_growth (outcome, publisher=world_bank_wdi, n=8533)

Variables missing data

  • world_bank_wdi:NY.GDP.MKTP.KD.ZG (outcome, name=real_gdp_growth)
  • world_bank_wdi:NY.GDP.PCAP.KD.ZG (outcome, name=real_gdp_pc_growth)
  • constructed: indicator = 1 for IND, year >= 2016 (Nov 2016 shock) (treatment, name=post_demonetisation_indicator)

Generated by scripts/run_descriptive.py at 2026-04-30T10:28:11+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Single-country structural break with a tightly-defined treatment date (2016-11-08). Annualised data primary; the WDI annual series smooths the shock so the test is on growth-rate level for fiscal years 2016-17, 2017-18 (Indian fiscal-year basis). Tax-revenue channel is informative.

Authored framework. Read the transparency note.