BACKGROUND

Evolution of models involving money supply as macroeconomic variable in the forms of policy variable as well as target variable in India since early 1970s till today is by and large linked to the development of econometric literature in the

DOI: 10.4018/978-1-4666-6268-1.ch023

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West. The issues dealt with by those models vary between pre-crisis period and post crisis period. The post crisis period witnessed the emerging is­sues of liquidity management and deviation from mainstream literature on money supply. Using chronologically classical regression models and time series analysis consisting of co-integration and Granger causality, the above models try to discern measurement and components of money supply and the feedback between money supply, price and output from both sides following ortho­dox literature except for a few, which expressed interest towards structuralism.

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