Intermediate Macroeconomics - I

Paper Code: 
ECO 312
Credits: 
3
Contact Hours: 
45.00
Max. Marks: 
100.00
Objective: 

This course introduces the students to formal modeling of a macro-economy in terms of analytical tools. It discusses various alternative theories of output and employment determination in a closed economy in the short run as well as medium run, and the role of policy in this context. It also introduces the students to various theoretical issues related to open economy.

9.00
Unit I: 
The Keynesian System-Aggregate Supply and Demand

Keynesian Aggregate demand schedule with classical theory of aggregate supply; Keynesian aggregate supply schedule

9.00
Unit II: 
Output, Inflation and Unemployment

Natural Rate Theory; Friedman’s view on Monetary Policy, output and inflation- Phillips Curve; Keynesian interpretation of Phillips curve.

9.00
Unit III: 
Monetarism and New Classical Economics

Monetarist prepositions; Friedman’s Restatement of Quantity Theory of Money; Fiscal and Monetary policy; Rational Expectations concept and its implications; new classical policy conclusions

9.00
Unit IV: 
Real Business Cycles and New Keynesian Economics

A simple real business cycle model, effects of positive technology shock; New Keynesian Economics – sticky price models, efficiency wage models, insider-outsider models and hysteresis

9.00
Unit V: 
Open Economy Macroeconomics

Mundell Fleming model of a small open economy under imperfect and perfect capital mobility with fixed and flexible exchange rates regimes, analysis of effectiveness of monetary and fiscal policies

Essential Readings: 
  1. Dornbusch, Fischer and Startz, Macroeconomics, McGraw Hill, 11th edition, 2010.
  2. N. Gregory Mankiw. Macroeconomics, Worth Publishers, 7th edition, 2010.
  3. Richard T. Froyen, Macroeconomics, Pearson Education Asia, 10th  edition, 2005.
  4. Paul R. Krugman, Maurice Obstfeld and Marc Melitz, International Economics, Pearson Education Asia, 9th edition, 2012.
Academic Session: 
2019-20
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