In this study, a macroeconometric model of the Indian economy is constructed and estimated for the period 1957-1976. The model is evaluated in terms of its ability to forecast major endogenous variables through historic simulation, and is then used in a set of experiments to examine the short and long period effects of changes in various important exogenous variables. The model is growth-oriented, and focuses on the process of capital accumulation which is, amongst other things, an important determinant of growth in laboursurplus economies such as India. Supply factors play a major role in determining capital formation and output. Thus, the constraint imposed by the availability of resources -viz., saving and capital imports -is an important factor in the process of capital accumulation. Keynesian-type demand phenomena play a minor role in determining output. The forces of demand, however, are involved in determining prices which partly determine real resource supplies, which in turn, affect the rate of capital formation and hence the growth rate of output. In order to articulate important institutional and economic characteristics of the economy, the role of the government sector in the process of accumulation is separately and endogenously examined, the economy is disaggregated into four major sectors and the process of capital accumulation and other determinants of sectoral output are separately analysed. The sectoral rates of capital formation are determined within the context of an overall constraint on aggregate capital formation imposed by the real volume of resources -viz. , saving and foreign capital. The study also attempts to look at some additional aspects of foreign capital. Thus, one question that is examined is whether foreign resource inflows adversely affect the domestic resource mobilization effort -viz. , the saving effort (of the government) for a given level and structure of taxation, prices and income, ana/or the taxation effort itself. Further, a sub-motiel of the foodgrains sector is constructed and integrated with the rest of the system to examine specific as well as economywide effects of Public Law (PL 480) foodgrain aid to India. Of interest are the effects on foodgrain and agricultural output and investment, as well on output in other sectors. To deal with the simultaneity problem the model is estimated by a two-stage procedure based on principal components. The tracking ability of the model is found to be reasonably good in respect of major endogenous variables. There is some evidence of weak (adverse) effects of foreign resource inflows on government saving, though no such evidence is found for the tax effort. PL 480 foodgrain aid is found to be a less-than-perfect substitute for commercial foodgrain imports, thereby implying that there is some foreign exchange saving implicit in each unit of PL 480 imports. Our simulation experiments suggest that an increase in foreign capital inflows over a short period have only temporary favourable effects on the growth rate of the economy though the time-path of national output is permanently raised. Moderate increases in foreign capital inflows sustained over a longer period, merely raise the time-path of output but have no significant effects on the rate of growth. Reduced PL 480 aid compensated by increased foreign exchange aid has favourable effects on foodgrain and agricultural output, as well as on national income. If there is no compensating increase in foreign exchange aid, but a corresponding decline in capital transfers to the government, there are economy-wide contractionary effects. In both cases, ther supply of foodgrains in the economy is adversely affected. Other simulation experiments suggest the presence of the ''Please Effect" in that increased direct taxation leaves the aggregate volume of saving unchanged, while increased government spending based on money creation is largely absorbed through rising prices. / Thesis / Doctor of Philosophy (PhD)

The purpose of this study is to explore the influence on urban employment patterns of changes in demand for commodities by foreign and domestic consumers. Foreign induced changes in commodity demand are reflected in this study by assumed changes in exports of selected comma-· dity groupss ranging from relatively unprocessed groups such as grain, to sophisticated groups such as electrical products and chemicals. The domestic sources of commodity demand change considered in this study are various components of current expenditure by the federal government on health, education and defense programs, as well as on total government expenditure. The influence of these sources of final demand change is traced to the employed populations of Montreal and Toronto metropolitan areas, and the component districts of these urban areas. An important concern is with whether or not some shocks tend to alleviate or accentuate existing unemployment rate disparities between the central city and fringe of Montreal and Toronto. A national input-output system, together with an appended employment allocation matrix is utilized to estimate the urban employment impacts. The area impacts differ because, on the one hand, employment in some industries is affected more than in others, depending on the particular source of final demand change assumed, and on the other hand the proportion of an area's employed population affiliated with a given industry tends to differ from that of other areas. Before implementing the model the latter proposition~ concerning inter-area differences in industrial affiliation pattern of the employed) is supported by theoretical reasoning and empirical analysis. Theoretically different industries have different locational preferences in an urban area, as a result of factors related to technology, cost of production, and market access. Combined with the theoretical assumption concerning minimization of cost and/or distance of travel to work, area differences in the proportion of workers affiliated with a given industry is implied. This hypothesis is not rejected by analysis of variance experiments based on the pattern of male and female employed populations residing in districts of Montreal and Toronto. Adjusted census statistics on the employed population are used in these experiments the adjustment being required in order to make the urban portion of the model consistent with the 1961 input-output system. Implementation of the model reveals that the metropolitan areas of Montreal and Toronto are influenced to similar degrees by the assumed changes in various components of final demand, but that certain sub-metro areas were affected more than others. There is a tendency for suburban and wealthier areas to be affected more than central and less affluent districts though there are important exceptions. Some components of final demand change tend to accentuate existing intra-urban unemployment disparities. It is finally shown how the area impact disaggregated by subpopulation can be used to identify structural factors responsible for inter-area differences in the total impact. The disaggregated impacts also reveal qualitative, or distributional aspects of the aggregate impacts and thus may be of interest to urban planners. It is possibles for example, to check if female or male employees, affiliated with a lower paying industry group, and resident in a relatively poor district of the city, is influenced more than average by a particular type of final demand change. The limitations and possible extensions are finally reviewed. One limitation involves the assumption that given the industry, subpopulations of the employed are discharged at similar rates when there is a fall in product demand. The theory treating labour as a quasifixed factor implies that the lower grades of labour would be discharged at higher rates than the higher grades. Any bias due to the omission of this effect would reinforce the results related to intra-urban unemployment rate disparities, however. Future research suggested by this study include incorporation of the discriminatory discharge effect into the model and further disaggregation of the work force of industries according to occupation or income group. / Doctor of Philosophy (PhD)