Paradox of a supply constrained keynesian equilibrium the COVID-19 case

Article Type

Research Article

Publication Title

Economic and Political Weekly

Abstract

The Indian economy, which was facing demand deficiency 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, afflicted 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.

First Page

22

Last Page

27

Publication Date

5-30-2020

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