ABSTRACT
In the previous chapter, we explored the overall picture of the Indian macro economy, which suggests that the new policy initiatives started in 1991 have not yet succeeded fully in reviving the economy. The question we examine here is whether these adjustment problems have been modelled appropriately
in the Indian context. In fact, macroeconomic model building in India is no longer a matter of simple experimentation. Over the years, a number of quantitative investigations have appeared from time to time describing the short-term fluctuations in the Indian economy. So we intend to provide a survey of the development of macroeconomic models in India, which is more than four decades old. Macroeconomic modelling was initially developed in the DCs in Tinbergen-Klein traditions,1 which was made possible with the steady evolution of economic theory, statistical techniques, and macroeconomic statistics. Subsequently, due to the efforts made by the UN in building a system of national accounts statistics, such modelling exercises were carried out for the DEs as well.
