This course is to provide students with a thorough understanding of core concepts and methods of macroeconomics as a foundation for subsequent study of macroeconomic topics within the degree programme, and as one of the key elements in the professional training of an economist. The techniques used will heavily rely on concept building and to ignite critical and analytical reasoning. The course will use microeconomic models of utility maximization, profit maximization and welfare maximization from an individual prospective and then build to develop macro-models using the assumption of aggregation. The major areas of focus will be the inputs market, goods market, money/asset market, and economic growth. Business cycles will also be discussed and linked to macroeconomic policy debate issues of ‘active’ versus ‘passive’ and ‘rules’ versus discretion. The equilibrium IS-LM, AD-AS model will be covered with some basic applications, providing a smooth transition to Macroeconomics-II.
Course Objectives & Learning Outcomes:
- Understand the structure of the economy and theories of macroeconomics at a level appropriate for a first year economics graduate
- Understand the key links between the goods market, input markets and money markets.
- Understand the macroeconomic models underlying the goods, input and money market, as well as the IS-LM, AD-AS framework.
Text for References:
- Andrew B. Abel, Ben S. Bernanke, Dean Croushore, Macroeconomics: Latest Edition.
- Mankiw, G. N., Principles of Economics – Latest Edition, Thomson South-Western, USA.
- Samulson and Nordrons – Economics –latest edition
- Parkin, Michael – Macroeconomics, latest edition
- Miller, R.L.– Economics Today – latest edition
- Measurement and Structure of the National Economy
Introduction, National Income Accounting: The Measurement of Production, Income, and Expenditure, Inflation and Interest Rates
- Productivity, Output, and Employment
Labour Market Equilibrium, Type of Unemployment, Okun’s Law
- Consumption, Saving, and Investment Goods Market Equilibrium
- Saving and Investment in the Open Economy
Balance of Payments Accounting, Goods Market Equilibrium in an Open Economy
- The Asset Market, Money, and Prices
Asset Market Equilibrium, Money Growth and Inflation
- Business Cycles
Business Cycles and rationality
- The IS-LM/AD-AS Models
The FE Line: Equilibrium in the Labour Market, The IS Curve: Equilibrium in the Goods Market, The LM Curve: Asset Market Equilibrium, General Equilibrium in the Complete IS-LM Model, Aggregate Demand and Aggregate Supply, Applications of AD/AS and ISLM models, Aggregate supply models in the short run, Phillips curve, Deflation path, Cost of deflation and inflation policy
- Economics of Growth
Exogenous growth model: Solow Model, Applications of Solow