This project supports cooperative research in the area of macro-econometric modeling between Drs. K. Krishnamurthy, Institute of Economic Growth, University of Delhi and Lawrence Klein, Department of Economics, University of Pennsylvania. India has a long and respectable record in research work related to empirical modeling and is currently working on the construction of an econometric model that is both comprehensive and flexible, capable of reflecting the existing complexities of the Indian economy and of anticipating developments that may emerge in future years. The model will be maintained, revised and updated continuously and used in forecasting and policy analysis. It will consist of a core macroeconometric model having components reflective of the most vital growth factors in the economy, as well as four mutually interactive submodels for: 1) agriculture, 2) industry, 3) public sector, 4) foreign trade. These satellite models will be integrated into the core model but capable of use in a stand alone mode. The major thrust areas will be: -- the strengthening of the segment dealing with external economic relations, development of a more efficient public sector capable of greater surplus generation, and growth in agriculture which is critical for satisfactory growth of the whole economy. The model will use time- series data compiled by the Central Statistical Organization, the Reserve Bank of India, and other reliable data sources in India. The proposed project will collaborate the efforts of Indian econometricians with researchers at project LINK, University of Pennsylvania. Project LINK is an international research group that does statistical studies of world trade and payments. National econometric models from many countries and regions throughout the world are installed at LINK as components of a total international trading system. The models are used for studying world economic trends and international economic policy. Scope: This project will support research among world class econometricians and contribute to the development of a long overdue economic growth model for India. As a major economic power, India ranks high as a candidate for explicit modeling in the LINK context. This research will provide an international perspective on economic tendencies and a means for assessing their impact on India. In addition, a significant and well maintained model for India will provide a useful tool in domestic economic development planning. The proposed programme will be relevant for the training of young researchers in model building, macro-enonometric policy analysis, data compilation, and specialized computer work. The project is being funded under two grants: University of Delhi, INT9211763 University of Pennsylvania, INT9119327
