Fifty Years of Development Economics: From Planning to Liberalization Essay in Honour of Prof. P.R.Brahmanande

Abstract

Fifty Years of Development Economics, Essays in Hon­our of Professor P.R. Brahmananda, Editors A. Vasedevan, D.M. Nachane, A.V. Karnik, Foreword Lord Meghnad Desai, Himalaya Publishing House, Mumbai 400 004, First Edition - 1999. This Volume is a collection of 30 essays, writ­ten in honour of Professor P. R. Brahmananda, a dis­tinguished economist in India. The essays in this book focus on a number of issues such as theory and meas­urement, Indian policy framework, snictural reforms, regional perspectives and provide rich insight on vari­ous subjects. The book also documents empirical stud­ies researched by well-known economists. The first part of the book with 8 chapters deals with theory and measurement of money, inflation etc.. In this part, Nachne's paper on "Commodity Stand­ards: Resurrection of a Classical Theme" revisits the issues relating to the concept of money standard and questions, the role of the Govenment in controlling money. The author, while reviewing the role of gov­ernment in controlling the monetary policy in histori­cal retrospection, examines a umber of alternative proposals. He chooses, amongst others, commodity standard, and analyses it to find out its relevance to modetary policy. His contribution lies in explaining the Black-Fama-Hall (BFH) model-Commodity Basket Model. This model has been discounted as it does not take into account expextations and has difficulties in choosing the commodities for the basket. The BFH model has a few advantages like a stable unit of ac­count, subjects the government to financial discipline, can stipulate financial innovations and can insulate the economy from cyclical fluctuations originating domes­tically. Nachne's contribution lies in simplifying the analysis on the difficult subject. Inflation has been a long drawn riddle in many countries like Brazil, Turkey, India. Control of infla­tion has been enforced in many countries to bring macro economic stability with high economic growth. Vasudevan, Bhoy and D hall have tried to trace equi­librium between inflation and growth rate in the In­dian context. They reached a conclusion that inflation, growth trends and their volatility, when analysed si­multaneously, reveal that a moderate rate of inflation on an average centered between 6 to 8 per cent in In­dian economy with low volatility, led to high growth rates. The authors have used regression robust error technique after taking recourse to a number alterna­tive empirical modes as suggested in the literature. The findings of the present exercise indicate that the thresh­old rate of inflation in the Indian context could be about 6 per cent; the output neutral inflation could be 4 per cent. The output effects are positive but marginally different from one another for the 5, 6 and 7 per cent inflation regimes. The negative output effects occur after 10 per cent inflation rate.