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MEAP-X13
PGDM-PT 2013-16: Term-II
Macroeconomics Analysis and Policy
Instructor:
Biswa Swarup Misra
E-Mail: biswa@ximb.ac.in
COURSE OUTLINE
Objective
:
Having dealt with the principles guiding decision making of the individual economic agents in your EA-I course, we would shift our focus to discuss the macro economic factors, which influence business outlook in this course. Every Business operates with an outlook. The exposure to the working of the macro economy helps one to shape the future outlook of business.
Macroeconomic concepts involve abstractions as one deal with economic aggregates such as GDP, Inflation, and Exchange rate etc. Though abstract, we may be very much conversant with some of the macro economic concepts in our day-to-day life or can relate to them very easily. For instance, consider the case of the inflation, a macro economic aggregate. Inflation is measured by the rise in the price index. We do not observe the price index (an abstraction), though we can observe the prices of individual items such as price of a candle, watch etc. which contribute to the price index. Nonetheless, many people (especially the salaried class) can easily relate to the price index!
We would be primarily interested in three macroeconomic parameters i.e. growth, employment and inflation. The discussions in the class would be oriented to appreciate the factors governing the above three parameters.
Coverage of this course would include discussion of macroeconomic fundamentals, various macroeconomic policies (Monetary and fiscal), policy options under alternate macro economic scenario, Inflation - Unemployment tradeoff, open economy macroeconomics and exchange rate policies. The discussion will be centering round the Indian context so that participants can relate what is covered in the class room to what is happening around them in the real life situations and appreciate the subject of discussion.
Further details about the Course can be seen from the Session Plan.
I welcome you to this course.
Session Plan
Session 1:
What Macroeconomics is all about
Distinction between Micro and Macro economics
Why we should be studying macroeconomics
Important Macroeconomic Variables
Distinction between Stock and Flow, Output and Wealth
Session 2:
Evolution of Macroeconomic Thought
Feudalism-Mercantilism-Classicists-Keyensian
Major Tenets of Classical School: Say’s Law of Markets
Introduction to National Income Accounting
Session 3-5:
National Income Accounting:
Various measures of economic activity: GDP, GNP,NNP, NDP, Distinction between economic aggregates measured at market prices and factor cost, National Income, Personal Income, Personal Disposable Income
GDP as a measure of economic Welfare
Session 6
Balance of Payment
Classification of various accounts: Current, Capital and Financial, Meaning of Capital Account Convertibility.
National Savings Identity, Linking Twin deficit of budget deficit and trade deficit.
Sessions 7
Concept of Equilibrium Income and Multiplier
Predicting Growth - Harrod Domar Framework and sectoral growth accounting framework
Measurement of Inflation, Biases in measurement of Inflation
Unemployment : Frictional, Structural and Cyclical Natural rate of unemployment
Inflation Measurement in India- GDP Deflator, WPI, CPI-IW,CPI-AL, CPI-UNME, CPI-Rl
Unemployment Measurement in India - Usual Status, CDS, CWS
Session-8
Long run determinants of Growth
Concept of Natural Rate of Output
Catch up effect and Convergence of Income across nations
Sessions 9-11
Stylised facts about Short run economic fluctuations
Predicting business cycles with leading Indictor Analysis.
Framework of Aggregate Demand and Aggregate supply to study business cycles.
Hard Landing vs. Soft Landing
Demand pull vs Cost push Inflation
Session-12
Inflation and Unemployment relationship
Phillips Curve-Short run vs. Long run
Friedman-Phelps expectation augmented Phillips Curve
Rational Expectations and the Phillips Curve
Session-13
Money-Functions
Components of monetary aggregates
Banks and Money Supply-Deposit Multiplier
Central bank and reserve money
Money Multiplier
Introduction to IS-LM Model
Derivation of IS and LM Curves
liquidity preference Theory of interest rate determination
Positions off the IS and LM curves
The path from disequilibria to equilibrium
Session-14
Factors affecting Slope of IS curve and LM curve
Shift of IS and LM curves
Analysis of effectiveness of monetary and Fiscal policy in the IS-LM framework
Derivation of the aggregate demand curve from the IS-LM framework
Impact of monetary contraction on interest rate -prediction of the LP theory and Fisher Effect
Session-15
Mendel-Fleming model - IS-LM model in an small open economy
Derivation of IS and LM curves
Effectiveness of Monetary, Fiscal and Trade policy under fixed and flexible exchange rate systems
Evaluation Criteria
Quizzes : 35%
Mid-Term Exam : 30%
End-Term Exam : 35%
Readings and References
Text Books (Readings from these Books are Mandatory):
1. Principles of Economics: Mankiw (Fourth Edition), 2007. Thomson (South-Western)
2.
http://websites.swlearning.com/cgi-wadsworth/course_products_wp.pl?fid=M20b&product_isbn_issn=0324236956&discipline_number=413
Macroeconomics: Mankiw (Sixth Edition), 2006. Worth Publishers
3. Macroeconomics: Dornbusch, Fischer, and Startz (Ninth Edition), 2004. Tata McGraw-Hill
Further Readings
:
(a) Macroeconomic Analysis: Edward Shapiro (Fourth Edition), 2007. Pearson Education
(b) Macroeconomics: Principles and policy: Baumol and Blinder (Ninth Edition), South- Western Publishing.
(c) Macroeconomics: Olivier Blanchard (Fourth Edition), 2007. Pearson Education
(d) Macroeconomics: Errol D' Souza (First Edition), 2008. Pearson Education
(e) Contemporary Economics: Milton Spencer, Worth Publishers
Created By:
Debasis Mohanty
on
10/21/2013
at
03:08 PM
Category
:
ExPGP-I
Doctype
:
Document
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