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Macro-Economic Policy Outcomes and Agriculture Relation between Fiscal Deficits and Investment in Agriculture

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  • Alagh, Munish

Abstract

In an earlier paper (Alagh, Munish, 2011) it was shown that macro economics matters in agriculture. The relevance of understanding the impact of macro-economic policy on agriculture was outlined, A forecasting exercise detailed the structure and response of supply to prices in the non foodgrain sector of the economy. The market and more generally macroeconomic policy impacts on agriculture needed to be understood. This is reviewed in this paper and it proceeds onwards from there to show that within macroeconomic policy specific policies such as an appropriate fiscal-monetary policy mix is relevant for the economy, and that fiscal policy should be seen as a process. It is shown that fiscal overspending outside agriculture should be curbed. The composition of fiscal policy relating to agriculture particularly public investment and subsidies is studied. It is seen that periods of sustainable deficits are periods of rising public investment in agriculture. ICOR’s are rising but less in the public sector suggesting externalities. Crowding in of private investment seems likely. Following this the political economy of fiscal policy in agriculture is briefly reviewed.

Suggested Citation

  • Alagh, Munish, 2011. "Macro-Economic Policy Outcomes and Agriculture Relation between Fiscal Deficits and Investment in Agriculture," IIMA Working Papers WP2011-10-05, Indian Institute of Management Ahmedabad, Research and Publication Department.
    • Handle: RePEc:iim:iimawp:10680
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    File URL: https://www.iima.ac.in/sites/default/files/rnpfiles/11950072452011-10-05.pdf
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    References listed on IDEAS

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    1. Michael T. Belongia, 1987. "Monetary shocks and the farm/nonfarm price ratio: empirical tests of competing hypotheses," Working Papers 1985-005, Federal Reserve Bank of St. Louis.
    2. anonymous, 2004. "The macroeconomics of fiscal policy," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 49(Jun).
    3. Just, Richard E. & Chambers, Robert G., 1987. "Deficits and Agriculture: An Alternative Parable," Working Papers 51240, International Agricultural Trade Research Consortium.
    4. Alagh, Munish, 2011. "Agricultural Economy of India and Macro-Economic Effects: Some Empirical Results and a Research Agenda based on the Literature," IIMA Working Papers WP2011-09-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
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    1. Alagh, Munish, 2013. "Positive and Normative Aspects of Food Policy and the Market in Indian Agriculture-An Empirical Analysis of Government Policy Interventions in Food Management," IIMA Working Papers WP2013-01-01, Indian Institute of Management Ahmedabad, Research and Publication Department.

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