Course 004 : Macroeconomic Theory
The objective of the course is to familiarise the students with (a) the concepts and issues in modern macroeconomics – as is applied in theory and practice across the world; (b) the major mathematical tools used in modern macro analyses.
The course has two modules. The first module will be taught by Mausumi Das and the second module will be taught by Dibyendu Maiti.
The first module starts with a brief discussion of the aggregative macro models which are static is nature and are typically used to analyses short run issues (e.g. current employment, current output, current rate of interest, current price level) and analyse the effectiveness of various policies under alternative frameworks. These static models, being static in nature, take various time dependent variables (e.g, capital stock, size of the workforce/population; state of the technology) as given. They are also aggregative in nature – without necessary micro-foundations. The first module then goes on to provide a micro-founded underpinning to these aggregative macto models and in the process also introduces various dynamic frameworks to analyse various medium and long run macroeconomic issues at hand. The first module focuses explicitly on long run output dynamics, i.e., issues related to economic growth (assuming prices to be constant). It uses dynamic techniques to analyse how the aggregate as well as per capita GDP growth rates respond to policy changes under alternative schools of thoughts.
The second module focuses medium run dynamics as captured by business cycles. This module will introduce various kinds of macroeconomic shocks and analyse how the macroeconomy dynamically adjusts in response to these shocks. It will also explore the implications of different policy changes for the macroeconomy under alternative schools of thoughts.
Mode of Evaluation
2 midterms (of 15 marks each) will be held during the semester.
A final examination (of 70 marks) will be held at the end of the semester.