The Budget, Money and Credit A Macroeconometric Analysis Srinivasa Madhur Pulin Nayak Prannoy Roy The authors here present a model of the fiscal and monetary sectors of the Indian economy for short-term macro economic forecasting and policy formulation and, in particular, for analysing the implications of the annual budget of the Central government for the economy at large. The effect of the budget on certain key macro variables such as money, credit and inflation is sought to be studied with the help of the model It is seen that many of the policy variables in the monetary sector which earlier investigations seemed to find insignificant can in fact be important and effective instruments in the hands of policymakers. It is also found that in formulating its interest rate policy, it is futile for the central bank to raise or lower all rates of interest by a common factor
