MACROECONOMIC THEORY- II

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

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.

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-Fiscalistdebate on Policy Activism. New classical approach to macroeconomics. RealBusiness 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 Multiplier-Accelerator Model,  Hicks Theory ; 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.      Froyen, R. T., Macroeconomics: Theories and Policies, Pearson Education India; 10thedition ,2013.

2.      Vaish, M.C. Macroeconomic Theory, Vikas Publishing House, New Delhi, 14th Edition, 2014.

References: 

1.      Branson, W. H., Macroeconomic Theory and Policy, Affilated East-west Press Pvt Ltd.; 3rd edition, 2005.

2.      Mankiw,N. G., Macroeconomics, Worth Publishers Inc.,10thedition, 2019.

3.      Edgemond, P., Macroeconomics, Prentice Hall of India, 1999.

4.      Rana, K.C.&Verma, K.N., Macroeconomic Analysis, Vishal Publishing Co., 11th edition, 2014.

5.        Ahuja, H. L.,Macroeconomics – Theory & Policy, S. Chand, 20th edition, 2019

Academic Session: 
2023-24
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