MACROECONOMIC THEORY- II

Paper Code: 
ECO 222
Credits: 
4
Contact Hours: 
60.00
Max. Marks: 
100.00
Objective: 

Course Objectives:

The objectives of this course are-

  1. To help the students analyze the post Keynesian theories involving IS - LM analysis.
  2.  To acquaint the students with the ideas of New Classical and New Keynesian macroeconomics.
  3. To develop an understanding of trade cycles and open economy macroeconomics.

 

Course Outcomes (COs):

Course

Outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Paper Code

Paper Title

ECO 222

 Macroeconomic Theory –II

CO16: Understand the post-Keynesian and New classical approaches to macroeconomics.

CO17: Comprehend the various aspects of inflation-unemployment relationship and trade cycles.

CO18: Evaluate various macroeconomic policies and their implications on the basis of coherent theoretical frameworks.

Approach in teaching: Interactive Lectures, Discussion,  Case studies.

 

Learning activities for the students:

Presentations, Assignments and Group discussions.

Class activity, Assignments, Quiz and  Semester end examinations.

 

12.00
Unit I: 
Post- Keynesian theories of determination of income and output

The IS LM model; graphic and algebraic derivation of IS and LM curves; factors that affect the equilibrium income and interest rate; relative effectiveness of monetary and fiscal policies.

12.00
Unit II: 
New Classical and New Keynesian Macroeconomics

Monetarist-Fiscalist debate on Policy Activism. New classical approach to macro economics. Real Business Cycles, New Keynesian Macroeconomics- Sticky Price (Menu Cost)

Model, Efficiency Wage Hypothesis.

12.00
Unit III: 
Inflation and unemployment

Inflation –Unemployment trade off - The Phillips Curve; The natural rate of unemployment hypothesis and Adaptive expectation hypothesis;

Relationship between short run and long run Phillips’ Curve; Sacrifice Ratio and Policy of disinflation.

12.00
Unit IV: 
Theories of Trade Cycle

Concept and Phases of Trade Cycle, Theories of Trade Cycle- Kaldor’s Theory , Samuelson’s Multiplies-Accelerator Model,  Hicks Theory ; Goodwin’s model; Control of business cycles – relative efficacy of monetary and fiscal policies.

12.00
Unit V: 
Open Economy Macroeconomics

Mundell - Fleming model of a small open economy under imperfect and perfect capital mobility with fixed and flexible exchange rate regimes. Analysis of effectiveness of monetary and fiscal policies.

Essential Readings: 
  1. Rastogi Saurabh and Aiyar Shekhar, National Income and Accounting, Lotus Books.
  2. Richard,T.Froyen, Macroeconomics: Theories and Policies, Pearson Education India; 10 edition ,2013.
  3. Branson, W. H., Macroeconomic Theory and Policy, Affilated East-west Press Pvt Ltd.; 3rd edition, 2005.
  4. Gregory Mankiw, Macroeconomics, Worth Publishers Inc., U.S., 5th edition, 2002.
  5. Edgemond, P., Macroeconomics, PHI, New Delhi, 1999.
  6. Vaish, M.C. Macroeconomic Theory, Vikas Publishing, New Delhi, 14th Edition, 2014.
Academic Session: 
2019-20
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