Rationale for developing this Course: Macroeconomics or aggregate economics analyses and establishes the functional relationship between the large aggregates. The aggregate analysis has assumed such a great significance in recent times that a prior understanding of macroeconomic theoretical structure is considered essential for the proper comprehension of the different issues and policies. Macroeconomics is not only a scientific method of analysis but also a body of empirical economic knowledge.Course Description: The Course equips the students to understand systematic facts and latest theoretical developments for empirical analysis.Course Objectives: This course helps in understanding the basic concepts and policies of macroeconomics.The course helps the students in establishing link between macroeconomic theory and its application.It prepares the students towards analyzing macroeconomic situations given different policy scenarios and models.Learning Outcomes: Ability to understand the different macroeconomic growth and development models.Ability to understand the different concepts and theories of Macroeconomics.Ability to understand Classical Macroeconomic Model.Ability to analyse policy implications of various macroeconomic models.
Overview
Syllabus
Week
Title of Video and Reading text/Lecture/ppt
First Week
Economic growth models – Harrod model
Domar growth model
Solow model
Solowian convergence
Second Week
Golden rule of accumulation
Steady state-properties
Endogeneous growth model by AK Sen
Endogeneous growth model by Romar
Third Week
Policy implications of Endogeneous growth models
Classical Macroeconomics – Assumptions
Say’s law of markets
Classical theory of employment
Fourth Week
Wage-cut policy
Keynesian theory of employment – the principle of effective demand, aggregate demand and aggregate supply
Consumption function- concepts-APC, MPC, APS, MPS
Keynesian psychological law of consumption and its implications
Fifth Week
Determinants of consumption function
Theories of consumption function – absolute income hypothesis
The consumption puzzle
Drift theory of consumption
Sixth Week
Relative income hypothesis
Life cycle hypothesis
Permanent income hypothesis
Random walk hypothesis
Seventh Week
Fisher’s theory of optimal inter-temporal choice
Investment –different types –business fixed, residential and inventory investment
Autonomous and induced investment, MEC, investment multiplier
Accelerator principle and super multiplier
Eighth Week
New theories of investment – accelerator theory, flexible accelerator theory, Tobin’s Q theory, Financial theory of investment
Demand for money- classical approach (quantity theory of money- cash transactions approach)
Quantity theory of money- cash balance approach
The Keynesian approach (liquidity preference theory )
Ninth Week
Keynesian liquidity trap
Post Keynesian approaches to demand for money- A) Baumol’s inventory theoretic approach
B) Tobin’s portfolio selection model
Monetary policy-meaning and objectives or goals
Tenth Week
Instruments of monetary policy
Expansionary monetary policy and restrictive monetary policy
Rules versus discretion in monetary policy
Fiscal policy- meaning and objectives or goals
Eleventh Week
Instruments of fiscal policy
Automatic and discretionary stabilizers
Crowding out and fiscal policy
Lags in effects of macroeconomic policies
Twelfth
Week
Time consistency in monetary policy
Problem of coordination of macroeconomic policy objectives – the assignment problem (Mundell and Swan model )
Public debt-macroeconomic impact
The government budget constraint
Thirteenth Week
The principle of Ricardian equivalence
Classicals versus Keynesians
Phillips curve analysis
Adaptive expectations and stagflation
Fourteenth Week
New classical macroeconomics –rational expectations
Policy implications of New classical macroeconomics
New Keynesian Economics – difference between new classical and new Keynesians
Sticky nominal wages – staggered wage contracts theory
Sticky prices model - Sticky real wages
Taught by
Dr. Navitha Thimmaiah
