Research
Thesis
"Health Impacts of a Monetary Policy Shock: Evidence from India’s 2016 Demonetization"
Abstract: By looking at the unexpected demonetization of 86 percent of India's currency in 2016, I analyze health impacts of monetary policy. Using individual-level health data from the Demographic and Health Survey and bank data from the Reserve Bank of India, I utilize the geographic variation in shock exposure as a natural experiment. I compare respondents before and after the demonetization with a pooled cross-section difference-in-differences approach. My significant short-run results show increased diastolic blood pressure, alcohol use and problems in accessing healthcare along with a decrease in tobacco use. Thus, the monetary policy measure exacerbated health conditions and features of the healthcare system and influenced health behavior in distinctive directions. Bank accounts and mobile phones were of health relevance in this regard, while their importance did not differ in terms of the degree of demonetization. To substantiate my findings, I build a demonetization model with health and health consumption. It confirms an overall health drop, intensified in more affected regions.