An Econometric Study of Relative Effectiveness of Monetary and Fiscal Policy in India (Report‪)‬

Introduction In macroeconomic policies, high employment, rising output of goods and services, and relatively stable prices are assigned to monetary and fiscal authorities to achieve these goals through economic stabilization measures. But a controversy has been growing among these authorities in examining the relative importance of monetary and fiscal actions in influencing macroeconomic variables. Opinions on this issue have varied greatly among economists. One school of economists, the monetarists, believe that monetary impulse is the most important factor accounting for variations in output, employment, and prices. They believe that changes in the money supply are the main sources of change in gross national product (GNP).