- Semester: I
- Number of Credits: 4
Preamble
Macroeconomics I effectively purports to be a bridge to the Macroeconomics-II course; though, at a basic level, it is complete in itself. It develops the subject up to the Neo-Classical synthesis of Keynesian and Classical frameworks via the monetarist supply curve. The treatment expected is through development of algebraic models using specific linear macro relationships right to the derivation of fiscal and monetary policy multipliers in the IS-LM framework. The multipliers are also expected to be derived using differential calculus techniques in the AS-AD framework. The inter-relationships between monetary, fiscal and exchange rate policies will be stressed at a basic level.
Module 1: Macroeconomic Variables (12 sessions)
Macroeconomic Variables – National Income Accounts – Flow-of-Funds Accounts – Social Accounting Matrices – Some Key Identities – Sectoral and Economy-wide Budget Constraints
Module 2: Determination of National Income and Price Level (12 Sessions)
Keynesian Models of National Income Determination – IS-LM Analysis – Fiscal and Monetary Policy Multipliers – Phillips Curve and the Monetarist Phillips Curve – AS-AD Model – the Neo-Classical Synthesis – dynamic aggregate supply curve
Module 3: Open-Economy Macroeconomics (12 Sessions)
Balance of Payments – Exchange Rate Regimes – Mundell-Fleming Model under Fixed and Flexible Exchange Rates – Exchange Rate Overshooting – Purchasing Power and Interest Rate Parities – Automatic Adjustment – Adjustment Policies: External versus Internal Balance
Module 4: Micro-foundations of Macroeconomic Relationships (12 Sessions)
Consumption Analysis: Permanent Income and Life-Cycle Hypotheses – Consumption under Uncertainty – Savings in Inter-temporal Models – Investment Functions: Neo-Classical and Keynesian – Money Demand – Money Supply Process: Money Multiplier
Essential Texts
1. |
Rudiger Dornbusch, Stanley Fischer and Richard Startz, Macroeconomics, 9e, Tata McGraw-Hill |
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Publishing Co. Ltd., New Delhi, 2004. |
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2. |
David Romer, Advanced Macroeconomics, 2e, McGraw-Hill International Edition, 2001. |
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3. |
Ben J. Heijdra and Frederick Van Der Ploeg, Foundations of Modern Macroeconomics, Oxford University |
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Press, Oxford, 2002. |
Additional Reading
1. |
Lance Taylor, Reconstructing Macroeconomics, Harvard University Press, Cambridge, Mass., 2004 |
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