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Economics for Policy Studies

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Course Type Course Code No. Of Credits
Discipline Core SPG2PP404 4

Semester and Year Offered: Semester 1 (Monsoon Semester)

Course Coordinator and Team: Partha Saha

Email of course coordinators: partha@aud.ac.in

Pre-requisites: None

Aim: This course is aimed at introducing the post graduate students to fundamental concepts in Economics which are relevant for an understanding of policy and how policy interventions may or may not address market failure.

Course Outcomes:

  • Develop an understanding of markets under different conditions.
  • Realize the importance of Public Policy interventions when markets fail.

Brief description of modules/ Main modules:

This course consists of five modules.

Module 1: Markets: Some Important Concepts – Four weeks

This module will introduce some important concepts used in understanding the functioning of market. The topics that will be discussed in module one are:

  • Demand, Supply and equilibrium price
  • Elasticity
  • Comparative statics
  • Efficiency  

Module 2: Different Forms of Market – Three weeks

This module introduces different forms of market and the topics that will be discussed in this module are:

  • Competitive Market
  • Monopoly
  • Monopolistic Competition
  • Oligopoly

Module 3: Market Failure & Role of Government – Two weeks

This module explores some important hurdles towards efficient allocation of resources and also explores some policy interventions aimed at removing such hurdles. The topics that will be discussed in module three are:

  • Externality
  • Public Goods
  • Asymmetric Information
  • Market Failure and Government Intervention

Module 4: Labour Market – Two weeks

In this module, to begin with, we will analyze how wage setting process and price setting process across all firms in the economy determine structural unemployment which can be altered by public policies that change labour productivity and degree of competition among firms. Further, in many instances labour unions play an important role in how the labour market works in terms of determination of remuneration, working conditions, and working hours. The topics that will be discussed in module five are:

  • Wage setting, price setting and unemployment in the aggregate economy
  • Unemployment and public policy
  • Labour union

Module 5: Credit Market – Two weeks

This module will provide a theoretical understanding of informal credit market with specific focus on rural credit market where interlinked modes of transactions are predominant. Important initiatives and their outcomes in terms of improving coverage of formal credit market institutions will be studied in this module.

The topics that will be discussed in module four are:

  • Theories of Informal Credit Market
  • Rural Credit Market
  • Interlinked Transaction
  • Credit Policies

Assessment Details with weights:

There will be two assessments (50 per cent weight in each) which will be written examination in classroom.

  • Assessment 1 – 50%

Written examination on different forms and characteristics of commodity markets and role of government during market failure

  • Assessment 2 – 50%

Written exam on characteristics of non-commodity markets (labour and credit) and policy challenges in these markets.

Reading List:

  • Economy, Society, and Public Policy, Core Project, Chapter 11, www.core-econ.org
  • Economy, Society, and Public Policy, Core Project, www.core-econ.org {Chapters 8, 14, 15}
  • Mankiw, N, G. (2014), “Principles of Microeconomics”, Cengage Learning, US. {Chapters 4, 5, 6}
  • Mankiw, N, G. (2014), “Principles of Microeconomics”, Cengage Learning, US. {Chapters 15, 16, 17}
  • Mankiw, N, G. (2014), “Principles of Microeconomics”, Cengage Learning, US. {Chapters 10, 11}
  • Nicholson, W., Snyder, C. (2010), “Intermediate Microeconomics and its Application”, South-Western Cengage Learning. {Chapters 9, 10}
  • Pindyck, R, S., Rubinfeld, D, L. (2009), “Microeconomics”, Prentice Hall, New York. {Chapter 8}
  • Pindyck, R, S., Rubinfeld, D, L. (2009), “Microeconomics”, Prentice Hall, New York. {Chapters 9, 10, 12}
  • Ray, Debraj. (2014), “Development Economics”, Princeton University Press, New Jersey. {Chapter 14}
  • Stiglitz, J, E., Rosengard, J, K. (2015), “Economics of the Public Sector”, W W Norton & Company, New York. {Chapters 3 to 7}
  • Varian, H, R. (2010), “Intermediate Microeconomics: A Modern Approach”, W. W. Norton & Company, New York. {Chapters 1, 15, 16}
  • Varian, H, R. (2010), “Intermediate Microeconomics: A Modern Approach”, W. W. Norton & Company, New York. {Chapters 34, 36 and 37}

ADDITIONAL REFERENCE:

  • Carlton, D, W., Perloff, J, M. (2015), “Modern Industrial Organization”, Pearson, New York. {Chapters 1 & 3}
  • Hall, R, E., Lieberman, M. (2010), “Economics: Principles & Applications”, South-Western Cengage Learning, New York. {Chapters 14 and 15}
  • Shetty, S, L. (2012), “Microfinance in India: Issues, Problems and Prospects: A Critical Review of Literature”, Academic Foundation. {Chapters 1 to 4}
  • Varian, H, R. (2010), “Intermediate Microeconomics: A Modern Approach”, W. W. Norton & Company, New York. {Chapters 34, 36 and 37}
  • Varian, H, R. (2010), “Intermediate Microeconomics: A Modern Approach”, W. W. Norton & Company, New York. {Chapters 24, 25, 27}
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