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Economics (Hons.) Semester II

Paper 05: INTRODUCTORY MACROECONOMICS

Course Description
This course aims to introduce the first year students to the basic concepts of macroeconomics. Macroeconomics deals with the aggregate economy. This course discusses the preliminary concepts associated with the determination and measurement of aggregate macroeconomic variable like savings, investment, GDP, money, inflation, and the balance of payments.

Course Outline

    • Introduction to Macroeconomics and National Income Accounting :- Basic issues studied in macroeconomics; measurement of gross domestic product; income, expenditure and the circular flow; real versus nominal GDP; price indices; national income accounting for an open economy; balance of payments: current and capital accounts.
    • Money :- Functions of money; quantity theory of money; determination of money supply and demand; credit creation; tools of monetary policy
    • Inflation :- Inflation and its social costs; hyperinflation.
    • The Closed Economy in the Short Run:- Classical and Keynesian systems; simple Keynesian model of income determination; IS-LM model; fiscal and monetary multipliers.

SUGGESTED READINGS:

  • Dornbusch, Fischer and Startz, Macroeconomics, McGraw Hill, 11th edition, 2010.
  • N. Gregory Mankiw. Macroeconomics, Worth Publishers, 7th edition, 2010.
  • Olivier Blanchard, Macroeconomics, Pearson Education, Inc., 5th edition, 2009.
  • Richard T. Froyen, Macroeconomics, Pearson Education Asia, 2nd edition, 2005.
  • Andrew B. Abel and Ben S. Bernanke, Macroeconomics, Pearson Education, Inc., 7th edition, 2011.
  • Errol D’Souza, Macroeconomics, Pearson Education, 2009.
  • Paul R. Krugman, Maurice Obstfeld and Marc Melitz, International Economics, Pearson Education Asia, 9th edition, 2012.

Paper 07: MATHEMATICAL METHODS IN ECONOMICS – II

Course Description
This course is the second part of a compulsory two-course sequence. This part is to be taught in Semester II following the first part in Semester I. The first course covered single variable functions and optimization and this course covers the essentials of linear algebra and optimization techniques required for the analysis of functions of several variables that are commonly used in economics.

Course Outline

  • Differential equations : First-order differential equations; integral curve, direction diagram and slope field; qualitative theory and stability.
  • Linear Algebra : Vector spaces: algebraic and geometric properties, scalar products, norms, orthogonality; linear transformations: properties, matrix representations and elementary operations; systems of linear equations: properties of their solution sets; determinants: characterization, properties and applications.
  • Functions of several real variables : Geometric representations: graphs and level curves; differentiable functions: characterizations, properties with respect to various operations and applications; second order derivatives: properties and applications; the implicit function theorem, and application to comparative staticsproblems; homogeneous and homothetic functions: characterizations and applications.
  • Multi-Variable Optimization : Convex sets; geometric properties of functions: convex functions, their characterizations, properties and applications; further geometric properties of functions: quasiconvex functions, their characterizations, properties and applications; unconstrained optimization: geometric characterizations, characterizations using calculus and applications; constrained optimization with equality constraints: geometric characterizations, Lagrange characterization using calculus and applications; properties of value function: envelope theorem and applications.

SUGGESTED READINGS:

  • K. Sydsaeter and P. Hammond, Mathematics for Economic Analysis, Pearson Educational Asia, Delhi, 2002.

Economics (Hons.) Semester IV

Paper 14: INTERMEDIATE MICROECONOMICS – II

Course Description
This course is a sequel to Intermediate Microeconomics I. The emphasis will be on giving conceptual clarity to the student coupled with the use of mathematical tools and reasoning. It covers general equilibrium and welfare, imperfect markets and topics under information economics.

Course Outline

  • General Equilibrium, Efficiency and Welfare : Equilibrium and efficiency under pure exchange and production; overall efficiency and welfare economics.
  • Market Structure and Game Theory : Monopoly; pricing with market power; price discrimination; peak-load pricing; two-part tariff; monopolistic competition and oligopoly; game theory and competitive strategy.
  • Market Failure : Externalities; public goods and markets with asymmetric information.

SUGGESTED READINGS:

  • Hal R. Varian, Intermediate Microeconomics: A Modern Approach, 8th edition, W.W. Norton and Company/Affiliated East-West Press (India), 2010.The workbook by Varian and Bergstrom could be used for problems.
  • C. Snyder and W. Nicholson, Fundamentals of Microeconomics, Cengage Learning (India),2010

Paper 15: INTERMEDIATE MACROECONOMICS – II

Course Description
This course is a sequel to Intermediate Macroeconomics I. In this course, the students are introduced to the long run dynamic issues like growth and technical progress. It also provides the micro foundations to the various aggregative concepts used in the previous course.

Course Outline

  • Economic Growth : Harrod-Domar model; Solow model; golden rule; techonological progress and elements of endogenous growth.
  • Microeconomic Foundations : a. Consumption: Keynesian consumption function; Fisher’s theory of optimal intertemporal choice; life-cycle and permanent income hypotheses; rational expectations and random-walk of consumption expenditure. b. Investment: determinants of business fixed investment; residential investment and inventory investment. c. Demand for money.
  • Fiscal and Monetary Policy : Active or passive; monetary policy objectives and targets; rules versus discretion: time consistency; the government budget constraint; government debt and Ricardian equivalence.
  • Schools of Macroeconomic Thoughts : Classicals; Keynesians; New-Classicals and New-Keynesians.

SUGGESTED READINGS:

  • Dornbusch, Fischer and Startz, Macroeconomics, McGraw Hill, 11th edition, 2010.
  • N. Gregory Mankiw. Macroeconomics, Worth Publishers, 7th edition, 2010.
  • Olivier Blanchard, Macroeconomics, Pearson Education, Inc., 5th edition, 2009.
  • Charles I. Jones, Introduction to Economic Growth, W.W. Norton & Company, 2nd edition, 2002.
  • Andrew B. Abel and Ben S. Bernanke, Macroeconomics, Pearson Education, Inc., 7th edition, 2011.li>
  • Errol. D’Souza, Macroeconomics, Pearson Education, 2009.
  • Robert J. Gordon, Macroeconomics, Prentice-Hall India Limited, 2011.

Paper 16: ECONOMY, STATE AND SOCIETY

Course Description
Employing perspectives from alternative schools of thought, this course explores the development of the structure and institutions of capitalist economies and their relationship to social and political forces. Students are expected to read some classic texts as well as more recent commentaries.

Course Outline

  • Analysing Social Change in Historical Perspective : The method of historical materialism; the transition from feudalism to capitalism; capitalism as a historical process – alternative perspectives.
  • Capitalism as an Evolving Economic System : Basic features; accumulation and crisis; the modern corporation; monopoly capitalism— alternative perspectives.
  • The State in Capitalism : The state and the economy – contestation and mutual interdependence; the state as an arena of conflict; imperialism – the basic foundations.

SUGGESTED READINGS:

  • J. Gurley, 1978, “The Materialist Conception of History”, Ch.2.1 in R. Edwards, M. Reich and T. Weisskopf (ed.), The Capitalist System, 2nd edition.
  • O. Lange, Political Economy, Vol. 1, 1963, Chapters 1 and 2
  • E.K. Hunt, History of Economic Thought, M.E. Sharpe, Indian edition, Shilpi Publications, 2004.
  • Irfan Habib, 1995, “Capitalism in History”, Social Scientist, Vol. 23, pp. 15-31.
  • R.L. Heilbroner, 1987, “Capitalism”, in The New Palgrave Dictionary of Modern Economics, Macmillan. Also reprinted as Chapter 2 in Behind the Veil of Economics by R.L. Heilbroner, W.W. Norton, 1988.
  • P. Sweezy, The Theory of Capitalist Development, Monthly Review Press, 1942, chapters 2, 4, 5, 6, 8 and 10.
  • Anwar Shaikh, 2000, Entries on “Economic Crises” and “Falling Rate of Profit” in T. Bottomore et al. (eds.), The Dictionary of Marxist Thought, OUP, Indian edition, Maya Blackwell.
  • Anwar Shaikh, 2000, Entries on “Economic Crises” and “Falling Rate of Profit” in T. Bottomore et al. (eds.), The Dictionary of Marxist Thought, OUP, Indian edition, Maya Blackwell.
  • Vamsi Vakulabharanam, 2009, “The Recent Crisis in Global Capitalism: Towards a Marxian Understanding”, Economic and Political Weekly, March 28, Vol. 44, pp. 144-150.
  • J. Schumpeter, Capitalism, Socialism and Democracy, George Allen and Unwin 1976, Chapters 6, 7 and 8.
  • P. Baran (1957), The Political Economy of Growth, Chapter 3, Pelican edition, 1973. 11. R. Heilbroner, 1985, “The Role of the State”, Ch.4 in The Nature and Logic of Capitalism.
  • M. Kalecki, 1972, “Political Aspects of Full Employment”, in E.K. Hunt and J.G. Schwarz (eds.), A Critique of Economic Theory, Penguin Books.

Economics (Hons.) Semester VI

Paper 23: INTERNATIONAL ECONOMICS

Course Description
This course develops a systematic exposition of models that try to explain the composition, direction, and consequences of international trade, and the determinants and effects of trade policy. It then builds on the models of open economy macroeconomics developed in courses 08 and 12, focusing on national policies as well as international monetary systems. It concludes with an analytical account of the causes and consequences of the rapid expansion of international financial flows in recent years. Although the course is based on abstract theoretical models, students will also be exposed to real-world examples and case studies.

Course Outline

  • Introduction : What is international economics about? An overview of world trade.
  • Theories of International Trade : The Ricardian, specific factors, and Heckscher-Ohlin models; new trade theories; the international location of production; firms in the global economy — outsourcing and multinational enterprises.
  • Trade Policy: Instruments of trade policy; political economy of trade policy; controversies in trade policy.
  • International Macroeconomic Policy : Fixed versus flexible exchange rates; international monetary systems; financial globalization and financial crises.

SUGGESTED READINGS:

  • Paul Krugman, Maurice Obstfeld, and Marc Melitz, International Economics: Theory and Policy, Addison-Wesley (Pearson Education Indian Edition), 9th edition, 2012.
  • Dominick Salvatore, International Economics: Trade and Finance, John Wiley International Student Edition, 10th edition, 2011.

Paper 24: DEVELOPMENT THEORY AND EXPERIENCE – II

Course Description
This is the second module of the economic development sequence. It begins with basic demographic concepts and their evolution during the process of development. The structure of markets and contracts is linked to the particular problems of enforcement experienced in poor countries. The governance of communities and organizations is studied and this is then linked to questions of sustainable growth. The course ends with reflections on the role of globalization and increased international dependence on the process of development.

Course Outline

  • Demography and Development : Demographic concepts; birth and death rates, age structure, fertility and mortality; demographic transitions during the process of development; gender bias in preferences and outcomes and evidence on unequal treatment within households; connections between income, mortality, fertility choices and human capital accumulation; migration.
  • Land, Labor and Credit Markets : The distribution of land ownership; land reform and its effects on productivity; contractual relationships between tenants and landlords; land acquisition; nutrition and labor productivity; informational problems and credit contracts; microfinance; inter-linkages between rural factor markets.
  • Individuals, Communities and collective outcomes : Individual behavior in social environments, multiple social equilibria; governance in organizations and in communities; individual responses to organizational inefficiency.
  • Environment and Sustainable Development : Defining sustainability for renewable resources; a brief history of environmental change; common-pool resources; environmental externalities and state regulation of the environment; economic activity and climate change.
  • Globalization : Globalization in historical perspective; the economics and politics of multilateral agreements; trade, production patterns and world inequality; financial instability in a globalized world.

SUGGESTED READINGS:

  • Debraj Ray, Development Economics, Oxford University Press, 2009.
  • Partha Dasgupta, Economics: A Very Short Introduction, Oxford University Press, 2007.
  • Abhijit Banerjee, Roland Benabou and Dilip Mookerjee, Understanding Poverty, Oxford University Press, 2006.
  • Thomas Schelling, Micromotives and Macrobehavior, W. W. Norton, 1978.
  • Albert O. Hirschman, Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations and States, Harvard University Press, 1970.
  • Raghuram Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy, 2010
  • Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action, Cambridge University Press, 1990.
  • Dani Rodrik, The Globalization Paradox: Why Global Markets, States and Democracy Can’t Coexist, Oxford University Press, 2011.
  • Michael D. Bordo, Alan M. Taylor and Jeffrey G. Williamson (ed.), Globalization in Historical Perspective, University of Chicago Press, 2003.