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Financing of fiscal response to COVID-19: a pragmatic alternative

Author

Listed:
  • Ayushi Bajaj

    (Monash University)

  • Gaurav Datt

    (Monash University)

Abstract

As governments around the world, including the Indian government, mount a fiscal response to the Covid-19 crisis, the question of how to finance it has risen to prominence. We argue that the option of the central bank monetizing the additional government debt and then writing it off offers a pragmatic way out.

Suggested Citation

  • Ayushi Bajaj & Gaurav Datt, 2020. "Financing of fiscal response to COVID-19: a pragmatic alternative," Indian Economic Review, Springer, vol. 55(1), pages 149-160, November.
    • Handle: RePEc:spr:inecre:v:55:y:2020:i:1:d:10.1007_s41775-020-00090-6
    DOI: 10.1007/s41775-020-00090-6
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    References listed on IDEAS

    as
    1. World Bank, 2020. "Global Economic Prospects, January 2020," World Bank Publications - Books, The World Bank Group, number 33044.
    2. Rogoff, Kenneth, 2020. "Falling real interest rates, rising debt: A free lunch?," Journal of Policy Modeling, Elsevier, vol. 42(4), pages 778-790.
    3. Galí, Jordi, 2020. "The effects of a money-financed fiscal stimulus," Journal of Monetary Economics, Elsevier, vol. 115(C), pages 1-19.
    4. World Bank, 2020. "Global Economic Prospects, June 2020," World Bank Publications - Books, The World Bank Group, number 33748.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Shreekant Gupta, 2020. "Pandemics, COVID-19 and India," Indian Economic Review, Springer, vol. 55(1), pages 1-12, November.

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    More about this item

    Keywords

    Deficit monetization; Monetary policy; Debt management; Covid-19 fiscal response;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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