MICRO ECONOMIC ANALYSIS
Meaning & Definition, Nature & Scope of Micro Economics – Law of Demand & Elasticity of Demand – Utility Analysis of Demand – Indifference Curve Analysis of Demand – Revealed Preference Theory – Recent Developments in Demand Theory
Theory of Production & Costs
Theory of Production – The law of variable proportions – The law of returns to scale – Isoquants approach on producer’s equilibrium – The law of Diminishing Marginal Rate of Technical Substitution – The Cobb – Douglas Production function – C.E.S. & VES production functions – Traditional & Modern Theories of costs.
Price & Output Determination
Equilibrium of the firm & industry under perfect competition – Price & output determination under monopoly – Price & output determination under monopolistic competition – meaning of concepts Monopsony, Bilateral Monopoly, oligopoly & duopoly.
Alternative Theories of Firm & Distribution
Bain’s limit Pricing Theory of recent development – Prof. Baumol’s Theory of Sales – Revenue maximization – Neo-classical theory of Marginal Productivity theory – Euler’s Theorem – Factors Pricing under different market conditions Modern Theories of Rent, Wages, Interest & Profit (including Shakle’s Theory of Profit).
Micro Theories of distribution:
a) Richardian, b) Marxian, c) Kalecki & d) Kaldor.
Nature of Welfare Economics – Pigovian of Welfare Economics & Externalities – Pareto’s Optimum Social Welfare Criterion – Kaldor – Hicks New Welfare compensations Principle – Scitovsky’s Double Criterion of New Welfare – Bergson’s social Welfare Function – Arrow’s impossibility Theorem.
1. Koutsoyannis, A. – “Modern Micro Economics”, - Macmillan Press, London.
2. Dewett, K.K. – “Modern Economic Theory”, - S. Chand, New Delhi.
3. Ahuja, H.L. “Modern Economics”, - S. Chand, New Delhi.
4. Varian, H. – “Modern Micro Economic Analysis,” – Macmillan Press, London.
5. Jhingan, M.L. – “Advanced Economic Theory”, Brinda Publication, New Delhi.
MONETARY ECONOMICS & FINANCIAL INSTITUTIONS
Post-Keynesian Theories to Demand for Money
Post-Keynesian approaches to demand for money - Patinkin & the Real Balance Effect, Approaches of Baomol & Tobin; Friedman & the modern quantity theory; Crisis in Keyman economics & the revival of monetarism.
Supply of Money
Financial intermediation-a mechanistic model of bank deposit determination; A behavioral model of money supply determination, a demand determined money supply process. RBI approach to money supply: High powered money & money multiplier; Budget deficits & money supply; money supply & open economy; control of money supply.
Theories of Inflation
Classical, Keynesian & Monetarist approaches to inflation; Structural theory of inflation; Philips curve analysis-Short run & long run Philips curve; Samuelson & Solow-the natural rate of unemployment hypothesis; Tobin’s modified Philips curve; Monetary policy to control inflation.
Financial intermediation & financial intermediaries – The structure of the financial system-Functions of the financial sector – Indicators of financial development. Profitability & efficiency of banks:- role & functions; Investment banking & merchant banking. Definition & types of non-bank financial institutions. Proliferation of banking & non-bank financial intermediaries.
Financial Markets & International Financial Institutions
Role & structure of money market & capital market. Basic concepts of share market – Primary & secondary market for securities’ SEBI: its impact on the working of capital market in India; IRDA & its role in financial markets.
International Financial Flows, forms & volume – Rise & fall of Brettonwood Institutions – International Liquidity – Post Maastricht developments – Reforms in International Monetary system for developing countries – Lending operation of World Bank & its affiliates – Working of IDA & IFC. Asian Development Bank & its lending activities; Asian Development Bank & India. Euro-Dollar & Euro-Currency markets: their development role & regulation at the International level.
INDIAN ECONOMIC POLICY
Economic Development & its Determinants, Demographic Features, Poverty & Inequality
Approaches to economic development & its measurement – sustainable development; Role of State, market & other institutions; Indicators of development – PQLI, Human Development Index (HDI), gender development indices. Broad demographic features of Indian population; Rural-urban migration; Urbanization & civic amenities; Poverty & Inequality.
The Agricultural Sector
Institutional Structure – land reforms in India; Technological change in agriculture – pricing of agricultural inputs & output; Terms of trade between agriculture & industry; Agricultural Finance Policy, agricultural Price Policy, Agricultural Marketing & Warehousing; Issues in food security – policies for sustainable agriculture.
The Industrial Sector
Industrial Policy; Public Sector Enterprises & their performances; Problem of sick units in India; Privatization & disinvestment debate; Growth & pattern of industrialization; Small-scale sector; Productivity in industrial sector; Exit policy issues in labour market reforms; Approaches for employment generation – Role of Information Technology in Industrial development.
Structure & direction of foreign trade; balance of payments; Foreign Trade policy, Issues in export – import policy & FEMA; Exchange rate policy; Foreign capital & MNCs in India; The progress of trade reforms in India – Appreciation of Rupee & its impact on India’s trade.
Five Year Plans & Economic Reforms
Five Year Plans – Objectives, strategy, approaches, achievements & failures evaluation of performance of five year plans – Economic Reforms Rationale on internal & external reforms – Impact of reform policy on different sectors of Indian Economy; Globalization of Indian economy; WTO & its impact on the different sectors of the economy; Need for issues in good governance; Issues in competition & safety nets in Indian economy.
Basic Reading List:
1. Ahluwalia, I.J. & I.M.D. Little (Eds.) (1999), India’s Economic Reforms & Development, Oxford University Press, New Delhi.
2. Bardhan, P.K. (9th edition) (1999), The Political Economy of Development in India, Oxford University Press, New Delhi.
3. Bawa,R.S. & P.S. Raikhy (Ed.) (1997), Structural Changes in Indian Economy, Guru Nanak Dev University Press, Amritsar.
4. Brahmananda, P.R. & V.R. Panchmukhi (Eds.) (2001), Development Experience in the Indian Economy: Inter State Prospectives, Bookwel, New Delhi.
5. Chakravarty, S. (1987), Development Planning: The Indian Experience, Oxford University Press, New Delhi.
6. Government of India, Economic Survey (annual), Ministry of Finance, New Delhi.
7. Jalan, B. (1992), The Indian Economy – Problems & Prospects, Viking, New Delhi.
8. Parikh, K.S. (1999), Indian Development Report – 1999-2000, Oxford University Press, New Delhi.
9. Reserve Bank of India, Report on Currency & Finance (Annual).
10. Sen, R.K. & B. Chatterjee (2001), Indian Economy: Agenda for 21st Century (Essays in honour of Prof. P.R. Brahmananda), Deep & Deep Publications, New Delhi.
Differentiation & its Application
Rules of differentiation – Basic Rules of Derivative – Quotient Rule – Chain Rule – Logarithmic & exponential rule conditions for maxima & minima of a function-point of inflexion – simple application of derivatives – calculation of marginal functions from total functions – maximization of profit & revenue – minimization of cost – elasticity of demand – relationship between average cost & marginal cost using derivatives – Relation between average revenue, marginal revenue & price – elasticity of demand – partial derivatives & its applications - optimization of functions with two independent variables – applications.
Integration & its Application
Concept of integration – definite & indefinite integration – Rules of integration – Applications of integrations to the calculation of total function from marginal function – application of definite integration to calculate area between two curves – to consumer’s surplus & producer’ surplus.
Correlation & Regression Analysis
Meaning, assumptions & limitations of simple correlation – Pearsons correlation coefficient & Spearman’s rank correlation coefficients & their properties – probable error – Regression methods of estimation of linear equation using ordinary least square method – standard error of regression coefficient – Partial & Multiple correlation & regression (applications only) – Methods of estimation of non-linear equations – parabolic & exponential.
Probability & Theoretical Distribution
Classical & empirical definition of probability – addition & multiplication theorems of probability; conditional probability; Bayes theorem & its application; Elementary concept of random variable; probability mass & density functions; Theoretical distributions – properties (without derivatives) of Binomial, Poisson, Normal & lognormal distributions; Fitting Binomial, Poisson & Normal distribution – Central limit theorem.
Sampling Techniques & Hypothesis Testing
Basic concepts & laws of sampling – different types of random & non-random sampling; concept of estimator; sampling distribution of mean & proportion – standard error & its uses in test of hypothesis. Procedure for testing a hypothesis-Null & alternative hypothesis confidence interval & level of significance – Type I & Type II errors – Hypothesis testing based on Z, t, X2 (Chisquare) & F tests – Techniques of analysis of variance – Non-parametric tests; advantages & disadvantages – sign test; median test; Kruskal-Wallis Rank Test-Fisher’s Transformation Tests.
MACRO ECONOMIC ANALYSIS
National Income & Accounts
Circular flow of Income in Two – Three & Four – sector economy; different forms of national income accounting – social accounting, input-output accounting, flow of funds accounting & balance of payments accounting.
Keynes’ psychological law of consumption – implications of the law; Short-run & long-run consumption function; Empirical evidence on consumption function; Income-consumption relationship – absolute income, relative income, life cycle & permanent income hypothesis.
Marginal efficiency of investment & level of investment; marginal efficiency of capital & investment – long run & short run; The accelerator & investment behaviour – impact of inflation; Influence of policy measures on investment – empirical evidence.
Neo-Classical & Keynesian Synthesis
Neo-Classical & Keynesian views on interest: The IS-LM model: Extension of IS-LM model with government sector; Relative effectiveness of monetary & fiscal policies; Extension of IS-LM models with labour market & flexible prices.
Recent Developments in Macro Economics
Supply side economics – adaptive & rational expectations theory – monetary policy – fiscal policy – monetary Vs. Fiscal policy using IS-LM model.
Basic Reading List:
1. Ackley G (1978), Macro Economics: Theory & Policy, Macmillan, New York.
2. Blackhouse, R. & A. Salansi (Eds.) (2000), Macro Economics & the Real World (2 Vols.), Oxford University Press, London.
3. Branson, W.A. (1989), Macro Economic Theory & Policy (3rd Edition), Harper & Row, New York.
4. Dombusch, R. & F. Stanley (1997), Macro Economics, McGraw Hill, Inc. New York.
5. Hall, R.E. & J.B. Taylor (1986), Macro Economics, W.W. Norton, New York.
6. Heijdra, B.J. & V.P. Fredericck (2001), Foundations of Modern Macro Economics, Oxford University Press, New Delhi.
7. Jha, R. (1991), Contemporary Macro Economic Theory & Policy, Wiley Eastern Ltd., New York.
8. Rosalind Levacic & Alexander Rebmann, Macro Economics – An Introduction to Keynesian – Neo-Classical Controversies, Macmillan, New York.
ECONOMIC GROWTH & DEVELOPMENT
Economics Growth & Development – Factors affecting economic growth – Role of capital labour & technology in development – capital controversy – Technological Progress – embodied & disembodied progress – Hicks, Harrod Kaldor models & Pasinetti – optimal savings & Ramsay’s Rule, golden rule of accumulation two sector model of Ujawa, Stability of equilibrium, money in economic growth – Models of Tobin, Levhari, Patinkin & Johnson. Endogenous growth model, A.K. Model – Explanations of cross country differentials in Economic growth.
Theories of Development
Classical theories of development – contribution of Adam Smith, Ricardo, Maltthus & J.S. Mill; Karl Marx & development of capitalistic economic theory of social change – surplus value & profit: immutable laws of capitalist development; crisis in capitalism; Schumpeter’s theory, innovation, Role of credit, profit & Structural analysis of development; imperfect market paradigm.
Approaches to Development
Partial theories of growth & development – vicious circle of poverty, circular causation, unlimited supply of labour, big push, balanced growth, unbalanced growth, critical minimum effort thesis, low-income equilibrium trap; Dualism – technical, behaviourial & social; Ranis & Fel Model; Dixit & Marglin model; Kelly et.al. Model; Dependency theory of development; Structural view of development.
Sectoral Aspects of Development
Role of agriculture in economic development; Efficiency & productivity in agriculture, New technology & sustainable agriculture; globalization & agricultural growth; Rationale & pattern of industrialization in developing countries; the choice of techniques & appropriate technology & employment; Efficiency of Small-scale Vs. large-scale production; Terms of trade between agriculture & industry; infrastructure & its importance; Role of information technology in Economic growth; Labour markets & their functioning in developing countries.
Allocation of Resources
Need for investment criteria in developing countries – Linear programming – basic concept & applications to allocation of resources – present Vs. future alternative criteria; cost benefit analysis, shadow prices, project evaluation & UNIDO guidelines.
1. Todaro, M.P., Economic Development, Addrison-Wesley reading, Massachussetts – USA.
2. Jhingan, M.L., Economics of Development & Planning; - Vrinda Publications (P) Ltd.
3. Meir, G.M., Leading Issues in Economic Development, Oxford University Press, Inc.
4. Kindleberger, C.P., Economic Development, Tata MacGraw Hill, New Delhi.
5. Benjamin Higgins, Economics Development, Central Book Depot, Allahabad.
6. O.S. Srivastava, Economic Growth Development & Planning, Vikas Publishing House Pvt. Ltd.
7. Simon Kuznets, Modern Economic Growth, Oxford & IBH Publishing Co.
8. A.P. Thirwall, Growth & Development, Palgrave Macmillan.
9. A.N. Agarwal & Kundanlal, Economics of Development & Planning, Vikas Publishing House Pvt. Ltd.
10. Gopal Lal Jain, Economic Growth & Development & Planning in India & Other Developing Countries, MJP Publishers, a unit of Tamil Nadu Book House.
11. M.L. Tanaeja, Dr. R. M. Myer, Economics of Development & Planning, Vishal Publishing Co.
Introduction & Rationale for Public Policy
Nature, scope & subject matter of public economics, Role of Government in organized society; changing perspectives of private sector, cooperation or competition? Government as an agent of economic planning & development; Government as a toll for operationalizing the planning process – Private goods & merit goods. Allocation of resources – voluntary exchange model; Impossibility of taxation – incidence – shifting & impact of tax – effects of taxation.
Public revenue; revenue receipts, capital receipts, trend in public revenue; tax revenue – nontax revenue – tax – canons of taxation – characteristics of a good tax system – objectives of taxation – incidence – shifting & impact of tax – effects of taxation.
Wagner’s law of increasing state activities; Wiesman – Peacock hypothesis; Pure theory of Public expenditure; Structure & growth of public expenditure; Reforms in expenditure budgeting; Programme budgeting & zero base budgeting; Expenditure Reforms Commission – Trends in public expenditure.
Principles of multi-unit finance; Fiscal federalism in India. Vertical & horizontal imbalance; Assignment of functions & sources of revenue; Constitutional provisions; Finance Commissions & Planning Commission; Devolution of resources & grants; theory of grants; Resource transfer from Union to States – Criteria for transfer of resources; Centre-State financial relations in India; Problems of States’ resources & indebtedness; Transfer of resources from Union & states in local bodies.
Indian Public Finance
Indian tax system – Revenue of the Union, State & local bodies; Major taxes in India; Direct & Indirect taxes, Taxation in agriculture, expenditure tax – Reforms in Direct & indirect taxes -, taxes on services, non-tax revenue of centre, state & local bodies; Analysis of Central & State government budgets; Lack of flexibility in Central & State budgets, shirking size of development finance through budgets; Trends in public debt; Recent Taxation Committee Reports – Reports of Finance Commission in India.
Basic Reading List:
1. A.B. Atkinson & J.E. Siglitz (1980), Lectures on Public Economics, Tata MacGraw Hill Publication.
2. A.J. Auerbach & M.Feldstern (1985), Handbook of Public Economics, Vol. 1, North Holland, Amsterdam.
3. R.A. Musgrave, The Theory of Public Finance.
4. H.L.Bhatia, Public Finance.
Introduction & Basic Theories of Environmental Economics
Meaning – definition of environmental economics – importance, scope, economics & environment – Theories of optimal use of exhaustible & renewable resources – concept of sustainable development – Economic accounting & the measurement of environmentally corrected GDP.
Externalities & market inefficiency – externalities as missing markets; property rights & externalities, non-convexities & externalities. Pareto optimal provision of public goods – Lindhal’s equilibrium, preference revelation problem & impure & mixed goods, common property resources.
Measurement of Environmental Values
Use values; option values – existence values non-use values; valuation methods – Hedonic property values & household production models (travel cost method & health production function), Methods based on response to hypothetical markets, contingent valuation methods.
The Theory of Environmental Policy
Pigouvian taxes & subsides, marketable pollution permits & mixed instrument (the charges & standard approach) – Coase’s bargaining solution & collective action, informal regulation & the new model of pollution control. Global environmental externalities & climate change – tradable pollution permits & internal carbon tax. Trade & environment in WTO regime.
Economic Impact of Environmental Pollution & Environmental Regulations
Environmental laws & their implementation: policy instruments for controlling water & air pollution & forestry policy; Environment & its impact on biosphere – Environmental impact on health of living creatures – Environmental Institutions & Grass Root Movement.
1. Fisher A C (1981) Resource & Environmental Economics, Cambridge University Press, Cambridge.
2. Hamley N., J.F. Shogern & B. White (1997) Environmental Economics in Theory & Practice, Macmillan.
3. Hussen, A.M. (1990) Principles of Environmental Economics, Routledge, London.
4. Jeroen, J.M. Vanden Bergh (1999), Handbook of Environmental & Resources Economics, Edward Elgar Publishing Ltd., U.K.
5. Callan & Thomas (1996), Environmental Economics & Management, Irwin Publication, London.
6. Tom Tietenberg (2004), Environmental & Natural Resource Economics.
7. Charles D. Kolstad (2000), Environmental Economics, Oxford University Press, New York.
8. Hindu Survey of Environment, The Hindu Publication (Yearly issue).