PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28

DORFMAN

T think we are in very complete agreement whenever there is a
sound way to approximate the consequences of a particular project.
When this is possible those consequences should be inserted in the
calculations and should be evaluated by means of the shadow prices.
It has been my experience that in practice the only consequences
that you can estimate reliably are those that are very proximate to
the project itself. The more remote consequences, which may be
very important in some instances, are connected with the direct results
 in extremely obscure ways that must be left in the realm of
judgment,

MAHALANOBIS

We are not in disagreement, but I am suggesting, on the basis
of some of our own experience in India, it would be useful to attach
a time period for public investments, even in sub-optimization in
the case of a particular project. Without building in an assigned
time period, I do not see how we can get a shadow price. If we
build in a time period, the solution may differ for 5 years or 10
years or 15 years, then it will be a question at a national level what
should be the proper period of time to be taken into consideration.
Whether the decisions are to be implemented by central planning
or by wise decision in a free economy is a separate question; I am
simply considering what would be the proper model.

DORFMAN

Professor MAHALANOBIS and I have both asserted repeatedly
that we are in agreement, but now I begin to feel that also we are
not understanding each other very well. Professor MAHALANOBIS

37

Dorfman - pag. 32