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Crypto Currency and the Political Economy of Monetary Policy in a Democracy

Author

Listed:
  • Sugata Marjit

    (School for Training and Analytical Research in Economics, Business and Society (STAREBS))

  • Kausik Gupta

    (University of Calcutta, Department of Economics)

Abstract

The paper attempts to examine the macroeconomic implications of the coexistence of crypto currency with legal tender money in the context of a democratic country such as India. The paper shows that macroeconomic implications of crypto currency can be captured by a simple extension of a basic macro model. The main potential political consequence emerges due to difficulty in implementation of monetary policy, especially prior to elections. The paper shows that if the share of crypto currency out of total money supply is high it is bound to impact on the efficacy of monetary policy, otherwise not. The paper also examines the practical difficulties of legalizing crypto currency.

Suggested Citation

  • Sugata Marjit & Kausik Gupta, 2025. "Crypto Currency and the Political Economy of Monetary Policy in a Democracy," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 23(4), pages 1033-1042, December.
    • Handle: RePEc:spr:jqecon:v:23:y:2025:i:4:d:10.1007_s40953-025-00457-7
    DOI: 10.1007/s40953-025-00457-7
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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • 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

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