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Growth Recession: J curve of Institutional Reform

Feb-2020 by Arvind Virmani

This paper analysis the collapse of GDP growth in 2019-20, tracing it to institutional changes introduced between 2014-2019. Though many of these changes are designed to improve the efficiency, long term productivity and equitable growth of the economy, they have negative effects in the short term, which we term the “J -curve of Institutional Change”. Awareness of these potential negative effects and preemptive policy actions to address then can help minimize them. The paper also offers policy suggestions on how to address them, now that they have already occurred, along with suggestions to accelerate growth.

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