Macroeconomic Theory - II

Paper Code: 
24ECO 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.

 

Course Outcomes: 

Course

Learning outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Course Code

Course Title

24ECO 222

 Macroeconomic Theory –II

(Theory)

Students will-

CO43: analyze the post-Keynesian developments in macroeconomics.

CO44: understand the New classical and New Keynesian approach to macroeconomics.

CO 45: comprehend the various aspects of inflation-unemployment relationship.

CO46: interpret the different dimensions of trade cycles.

CO47: examine open economy macroeconomics.

CO48: contribute effectively in course-specific interaction.

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-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: 

Suggested Readings:

  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.

E Resources:

  • Mundell, R.A. (1963). Capital mobility and stabilization policy under fixed and flexible exchange rates. Canadian Journal of Economics and Political Science, 29(4), 475-485.
  • Fleming, J.M. (1962). Domestic financial policies under fixed and floating exchange rates. IMF Staff Papers.9. 369-379.

Journal:

  • Journal of Macroeconomics, Elsevier

 

Academic Session: 
2024-25
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