The recent demonetization exercise in India is a unique monetary experiment that made 86 percent of the total currency in circulation invalid. In a country where the currency in circulation constitutes 12 percent of GDP, the policy turned out to be a purely exogenous macroeconomic shock that affected all agents of the economy. This paper documents the impact of this macroeconomic shock on households. By construction, the policy helped households with bank accounts in disposing of the demonetized cash. We use a new household-level data set to tease out the effects of this policy on households with no bank accounts relative to households with bank accounts. Our results show that the impact of demonetization on household income and expenditure has been transient. We find that households with no bank accounts experienced a significant decrease in expenditure in November and December-2016. We find a slight decline in income in November-2016 but the effect dissipates thereafter. There is significant heterogeneity in the impact across households in different asset quartiles. We also show evidence of recovery of household finances whereby households were able to smooth out consumption during the post-demonetization period. However, this recovery phase is associated with an increase in household borrowing from different sources. In particular, informal borrowing (e.g. money lenders and shops) increased during this period.

印度最近进行的货币贬值活动是一项独特的货币实验，使86％的流通货币无效。在一个流通货币占国内生产总值12％的国家，该政策原来是纯粹的外在宏观经济冲击，影响了经济的所有主体。本文记录了这种宏观经济冲击对家庭的影响。通过建设，该政策帮助拥有银行账户的家庭处置了非现金。我们使用新的家庭级数据集来说明此政策对没有银行账户的家庭（相对于拥有银行账户的家庭）的影响。我们的结果表明，非货币化对家庭收支的影响是短暂的。我们发现，没有银行账户的家庭在2016年11月和2016年12月的支出大幅减少。我们发现收入在2016年11月略有下降，但此后这种影响消失了。不同资产四分位数的家庭之间的影响存在很大的异质性。我们还显示了家庭财务状况恢复的证据，从而使家庭能够在非货币化后的时期理顺消费。但是，此恢复阶段与来自不同来源的家庭借贷增加有关。特别是在此期间，非正式借贷（例如放债人和商店）增加了。不同资产四分位数的家庭之间的影响存在很大的异质性。我们还显示了家庭财务状况恢复的证据，从而使家庭能够在非货币化后的时期理顺消费。但是，此恢复阶段与来自不同来源的家庭借贷增加有关。特别是在此期间，非正式借贷（例如放债人和商店）增加了。不同资产四分位数的家庭之间的影响存在很大的异质性。我们还显示了家庭财务状况恢复的证据，从而使家庭能够在非货币化后的时期理顺消费。但是，此恢复阶段与来自不同来源的家庭借贷增加有关。特别是在此期间，非正式借贷（例如放债人和商店）增加了。