The Hindu : Tamil Nadu / Chennai News : `Econometrics useful policy-making tool for developing countries'

Online edition of India's National Newspaper
Thursday, Jan 13, 2005

Tamil Nadu

Tamil Nadu - Chennai

`Econometrics useful policy-making tool for developing countries'

By Our Special Correspondent

CHENNAI, JAN. 12. Econometrics can play a great role in India and other developing countries as a result of developments in computing and statistics and the availability of databases and tools of modelling, according to Arnold Zellner, Distinguished Professor, Graduate School of Business, University of Chicago.

Econometric models, to deserve their name, should be capable of making predictions, afford explanations and could serve as a policy-making tool.

Despite great advances in econometrics, policy-makers, often untrained in economics, were unresponsive to the potential of modelling. This did not mean that the models were a failure. Academics should get policy-makers involved in the application of modelling, he said.

Prof. Zellner, who released the "Festschrift Volume" titled "Topics in Applied Economics — Tools, Issues and Institutions", published in honour of U. Sankar, Honorary Professor and former Director of the Madras School of Economics (MSE), also emphasised the scope for application of psychology and learning models in economics.

The volume, edited by G. Mythili, Associate Professor, Indira Gandhi Institute of Development Research, and R. Hema, Associate Professor, MSE, contains 12 academic papers contributed by Dr. Sankar's associates and students, including one co-authored in the 1960s by Dr. Sankar and his mentor, Dr. Zellner.

Dr. Hema said the volume covered a wide range of topics including complementarity (as distinct from the traditionally advocated substitutability) of private and common property resources, indices for poverty measurement below the poverty line, efficacy of institutional arrangements with reference to economic reform, power sector and capital market reforms and pollution control in the tanning industry.

Paul P. Appasamy, Professor, MSE, paid tributes to Dr. Sankar's contributions in developing the MSE's reputation and its specialisation in environmental economics and application of economic analysis to space programmes. Raja J. Chelliah, Chairman of the MSE, said students should look beyond the "Washington Consensus" and the market mechanism to understand the economic environment in its totality. Dr. Sankar commended Dr. Chelliah's example in affording freedom of research in the MSE. A. Vaidyanathan (Madras Institute of Development Studies), A. Nalla Gounden (formerly of Madras University) and Sunder Ramaswamy (Director, MSE) spoke.

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