Macroeconomic Effects Of Public Invesment In Infrastructure In India

This paper attempts to build an aggregative, structural,macroeconometric model for India. Investment and output in the model are disaggregated into four sectors namely(a) agriculture including forestry and fishery (b)manufacturing (c)infrastructure (d) service sector. The model emphazises the interrelationships between the internal and external balances as also the realtion between money, output, prices and balance of payments.The model also incorporates the savings- investment identity.The model also tries to link economic growth and poverty reduction. The model is validated for it's in-sample forecasting ability. A few counter factual policy simulations relating to public investment in infrastructure is undertaken to illustrate the usefulness of the model.[IGIDR WP 003]