INDIAN INSTITUTE OF MANAGEMENT LUCKNOW POST GRADUATE PROGRAMME, 2012-13

WMP I, Term IV, March, 2013

MACROECONOMIC ENVIRONMENT

COURSE OUTLINE

Credit: Session Duration: Number of Sessions: Course Objectives:

One 90 minutes 20

(1) To expose the students to the fundamental principles and issues of macroeconomic theory (2) To explore the relationship between macroeconomic theory and policy formulation (3) To enable application of macroeconomic tools and techniques in anticipating changes in the macroeconomic environment that will help in taking effective business decisions with specific reference to Indian economy Reference Text Book Rudiger Dornbusch, Stanley Fischer, and Richard Startz, Macroeconomics, Tata McGraw-Hill, 2008, Tenth International Edition (DFS):

N. Gregory Mankiw: Macroeconomics, Worth Publishers, 2007, Sixth Edition Source(s) for Indian Macroeconomic Environment Reserve Bank of India, Reports on Currency and Finance, Various Issues Economic Survey, Government of India, Various Issues Handbook of Statistics on Indian Economy, 2003, Reserve Bank of India National Account Statistics, CSO, Government of India, Various Issues Instructor (Faculty) Prof. Chandan Sharma

Evaluation Criteria
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Class Participation/Quiz/Project Mid-Term Examination Final Examination

40% 25% 35%

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Macroeconomic Environment Course Outline 2010-11

Sessions 1 Topic Introduction Microeconomics vs. Macroeconomics Central Issues in Macroeconomics Indian Macroeconomy Stylised Facts National Income Accounting Approaches to Measurement Circular Flow of Income National Income Concepts CSO and National Accounting System in India Aggregate Demand and Supply Short Run vs. Long Run Classical vs. Keynesian Developed vs. Developing Economies The Simple Keynesian Theory of Income Determination Introduction to Income Determination Consumption Function and Aggregate Demand Average and Marginal Propensity to Consume Multipliers: Investment, Tax, Government and Balanced Budget Trends in Private Final Consumption in India Money, Interest and Income The Goods Market and the IS Curve Money Supply and Money Demand The Money Market and the LM Curve Equilibrium in the Goods and Money Markets Deriving the Aggregate Demand Curve Relation between Money, Interest Rate & GDP in India Money Demand and Money Supply Process Fiscal and Monetary Policy Effectiveness of Fiscal Readings DFS, Ch. 1

2-3

DFS, Ch.2

DFS, Ch. 5/ Mankiw Ch.3

5-6

DFS, Ch. 9

7-9

DFS, Ch. 10

10 11-12

and

DFS, Chapter 15 and 16 DFS, Ch. 11/ Mankiw Monetary Ch. 14

13-15

16 17 18

19-20

Policies The Policy Mix in Action Indian Money Market Nature and Trends in Fiscal Deficit in India Aggregate Supply: Wages, Prices, Unemployment and Inflation Models of Aggregate Supply Unemployment-Inflation Tradeoff: The Phillips Curve Demand-Pull vis--vis Cost-Push Inflation Okuns Law and Sacrifice Ratio Rational Expectation and Painless Disinflation Inflation in India: Monetary or Structural Consumption and Saving Functions Investment Function Open Economy Macroeconomics Balance of Payments International Trade Exchange Rate Determination Indian External Account: Exports and Imports Macroeconomic Issues in the Context of the Indian Economy, such as: Economic Slowdown and Macroeconomic Policy Global Financial Crisis and Indian Economy Issues in Measurement of Inflation in India Fiscal Deficit and Economic Growth in India Economic Reforms and Inclusive Growth Money Demand and Money Supply in India Savings and Investment Behaviour in India

DFS, Chs 6 and 7/ Mankiw Ch. 13

DFS, Ch. 13 DFS, Ch. 14 DFS, Ch. 12

Assignment Preparation and Seminar Presentation & Discussion