ABSTRACT
The models that we have discussed so far have been concerned with the achievement of certain targets. These targets are set arbitrarily in the sense that they are not derived from any optimization criteria. As such these consistency models do not incorporate any explicit national objective function to be maximized (or minimized) subject to constraints. But as we know, economics is a science of choice within constraints. No economy can produce as much as it wants. At any point in time it is bound by resource availability (or the production possibility frontier). Over the course of time, the production possibility frontier is likely to expand; but that does not eliminate the problem of choice. The planners’ job is to find an ‘optimum’ allocation of resources in the short to medium term, keeping in view the long-run objective of expanding the economy’s production possibility frontier.
