AN OUTLINE OF EXISTING LITERATURE ON MONEY SUPPLY

As per the researchers on monetary economics, a detailed account of the changing role of money from Walrasian and Non-Walrasian settings to the more recent theories on the dynamics of the relationships between money, inflation and growth with reference to their historical evolution are available in Friedman and Woodford (Eds.) (2011) and such type of theoretical work did not happen in India.

In the tune of Krishnamurty (2002), as could Soumya and Murty (2005) be interpreted, the is­sues emerging from the shift from net domestic assets to net foreign assets on resources side of the monetary base in the wake of financial liber­alization and the ensuing changes in the monetary policy i.e. relying more on market based direct measures than on direct monetary controls had been addressed by modelling money supply process in India, e.g. Rath (2001) and Nachane (2001). The latter discussed the impact of liberal­ization on monetary policy and the link between monetary base and money supply during the post reform period. Models in these works, which, in the language of Krishnamurty (2002), “are large, dynamic, incorporate better inter-dependence of sectors compared to many of the earlier models and attempt to incorporate change in policy regime,” and in the language of Bhide (2001) “are those

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