The economic performance of Nepal is governed by many diverse factors interconnected by means of natural, human and economic forces. Research studies are invariably confronted with questions of choice between alternative paradigms, empirical models, analytical frameworks and quantitative techniques. The most serious of all problems in research on Nepal, however, is the lack of dependable time series data, even on such key macroeconomic variables as national consumption, savings and investment.
Given these limitations, a research study must bear with the constraints presented by poor data, which may adversely effect the efficiency of the study. The present paper, with due consideration of these difficulties, has attempted to initiate the macroeconomic approach very cautiously so that the results obtained for an analysis of monetary phenomena in Nepal may be more reliable and consistent.
