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Macroeconomics-II

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Course Type Course Code No. Of Credits
Discipline Core NSUS1EC108 4

Course Coordinator and Team:                  SES Faculty

Email of course coordinator:                       pcbabed@aud.ac.in  

Pre-requisites:                                               No

Course Description: 

This course introduces students to the study of macroeconomics using models based on explicit microeconomic foundations. It will use simple one- and two-period models to discuss the consumption-savings problems, investment problems and business cycle theory. It also includes a brief introduction to growth theory.

Course Objectives:

  • To familiarize students with the basic facts and frameworks of the theory of economic growth.
  • To familiarize students with the intertemporal micro-founded framework of macroeconomics.
  • To provide an introduction to the analysis of business cycle phenomena in the above framework.

Course Outcomes: 

  • Describe basic facts about growth from the past two centuries.
  • To analyze questions related to growth in simple exogenous and endogenous growth models.
  • To explain how household and firm decisions underlie the working of goods, labor and financial markets.
  • To analyze business cycle problems in simple two-period intertemporal models.

Brief description of the modules: The course will consist of three main modules:

  • Module I: Microeconomic foundations: This module explores the individual choices made by consumers and firms that form the basis of macroeconomic behavior. It examines how utility maximization, profit-seeking behavior, and market interactions influence aggregate outcomes. Understanding these micro-level decisions helps build a solid foundation for analyzing macroeconomic phenomena like consumption, investment, and labor supply
  • Module II: Growth theory: Focusing on the long-run behavior of economies, this module introduces the basic facts and models of economic growth. It covers classical and neoclassical growth theories, and examines the roles of capital accumulation, technological progress, and human capital. The goal is to understand the drivers of sustained improvements in income and living standards.
  • Module III: Business cycles: This module analyzes short-run economic fluctuations using simple intertemporal models. It investigates the causes and nature of business cycles, both in the presence and absence of money. Students explore the dynamics of output, employment, and inflation, and how policy tools can stabilize economic activity during different phases of the cycle.

Assessment Plan

S.No

Assessment

Weightage

1

Class Test

30%

2

Assignment

30%

3

End Term

40%

References:

  • [W] Williamson, S. (2018) Macroeconomics, 6th ed., Pearson
  • Solow, R. M. (1988). Growth theory and after. The American Economic Review, 78(3), 307-317.
  • Stock, J. H., & Watson, M. W. (1999). Business cycle fluctuations in US macroeconomic time series. Handbook of macroeconomics, 1, 3-64.
  • Galí, J. (2015). Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian framework and its applications. Princeton University Press.
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