Intermediate Macroeconomics I

National Income Analysis 

  1. National Income Accounting for Closed and Open Economies with Numerical Problems. Okun’s Law and Implications, Purchasing Power Parity and Its Limitations.

  2. Importance of Saving-Investment Gap and its Constituents with Special Reference to the Case of India

  3. Issues Related to Distribution of National Income

  4. Role of Unintended Inventories

  5. Analysis of Price Indexes  Computation, Usefulness & Limitations

Theories of Consumption and Investment Function 

  1. Keynesian Absolute Income hypothesis, Secular Stagnation Hypothesis, Kuznets’ and Goldsmith’s empirical findings and consumption puzzle  Implications with Budget Data and Long-run Time Series Data, Relative Income Hypothesis, Intertemporal optimization as a basis for consumption function, Life-Cycle hypothesis and Permanent Income hypothesis. Consumption under Uncertainty: Hall’s Random walk hypothesis, Rational Expectations and their policy implications. Ricardian Equivalence [Barro-Ricardo Hypothesis]. 

  1. Traditional (Simple) and Flexible Accelerator model of investment. Drawbacks of the Accelerator Model.

Keynesian Model of Effective Demand and Income Determination 

  1. Simple Keynesian Model – equilibrium, adjustment process and stability (with economic interpretation of the stability condition) – comparative static analyses: Formal  derivation of (autonomous) expenditure multipliers, Paradox of Thrift, SKM multiplier in an open economy. 

  1. IS – LM Model – commodity market equilibrium and the IS curve, money market equilibrium and the LM curve – macroeconomic equilibrium and the adjustment process, stability of equilibrium with explicit derivation of the stability condition  comparative static analyses: fiscal policy, monetary policy (with special reference to interest rate overshooting) and policy mix, accommodating monetary policy, real balance effect - long run version of the model under price adjustment. Bond price and interest rate. Walras’ Law. Derivation of the AD curve.

  1. The Complete Keynesian Model: Effect of change in money supply when the price level is flexible. The Keynesian Labor market. Under-employment equilibrium in the Keynesian model.

Classical Macroeconomics 

  1. The Classical full employment model  Analysis of real sectors

  2. Wage-Price Flexibility and The Classical Labor Market

  3. The Classical Dichotomy

  4. The Classical theory of Saving, Investment and the Interest rate

  5. Patinkin’s Integration of Real and Monetary Sector

  6. The Pigou Effect and Its Criticism.

  7. Keynes’s criticism of the Classical View.

The Post-Keynesian Theories of Demand for Money 

  1. Portfolio Theory of Demand for Money

  2. Baumol’s Transaction Demand for Money

  3. Tobin’s Theory of Speculative Demand for Money: The Portfolio Optimization Approach

  4. Friedman’s Re-statement of Quantity Theory of Money

References: 

  1. Dornbusch, Fischer and Startz: Macroeconomics (Tata McGraw-Hill), 9th Edition, Ch. 1, 2

  2. Blanchard: Macroeconomics (Pearson Education), 4th Edition, Ch. 2, 3

  3. Mueller Max G (Ed.): Readings in Macroeconomics (Holt, Rinehart & Winston of Canada Ltd.)

  4. Laidler D: Demand for Money: Theories and Evidence (Allied Publishers)

  5. Mankiw N. G: Macroeconomics, Worth Publishers.