Sem 1

Microeconomics I 1. 2. Semester: I Number of Credits: 4

This is a one-semester course taught over 48 one-hour sessions. The course is divided into 4 modules of 12 sessions each. The method of instruction will be exclusively lectures. The objective is to introduce students to modern microeconomics in a gradual fashion, leading up to Microeconomics 2, which will be offered in the second semester. Microeconomics 1 will cover the traditional approaches to microeconomics, assuming complete markets, nonstrategic, utility- maximising individuals, as well as profit-maximising firms in a competitive market setup with symmetric, perfect and complete information. Prerequisites: Undergraduate level microeconomics, mathematical prerequisites course offered in semester 1. Special Note: The teaching of Microeconomics 1 will start after the mathematical prerequisites course has been covered. Module 1: Consumer Behaviour Rational choice and revealed preference, existence of the utility function, consumers problem and the demand function, income-compensated demand functions, Slutsky matrix, expenditure and indirect utility functions and their properties, duality, measuring the welfare effects of a price change Module 2: Theory of the Firm Production: returns to scale and varying proportions, production functions (Cobb Douglas, CES and Translog) and measurement of efficiency, input demand functions and their properties, cost, duality in production, profit function and its properties Module 3: The Competitive Firm (partial equilibrium) Excess demand function and existence of equilibria, stability, modeling of expectations, derivation of long run and short run supply curves, classical model of the equilibrium of the firm, optimal size of the firm, criticism of the classical model Module 4: Perfect Competition, Walrasian General Equilibrium in a Pure Exchange Economy Excess demand function and its properties, ttonnement process and the proof of existence of general equilibrium (using Brouwers fixed point theorem), core and equilibria, the first and the second fundamental theorem of welfare economics, market failures and externalities, second best theorem. Essential Text 1. G.A. Jehle. and P. J. Reny, 2000, Advanced Microeconomic Theory, Addison-Wesley Longman 2. A. Mas-Colell, M.D. Whinston and J. Green, 2005, Microeconomic Analysis, Oxford University Press 3. H. R. Varian, 1992, Microeconomic Analysis, WW Norton & Co. Additional Reading 1. R. Starr, 1997, General Equilibrium Theory: An Introduction , Cambridge University Press

Macroeconomics I 1. 2. Semester: I Number of Credits: 4

Preamble Macroeconomics I effectively purports to be a bridge to the Macroeconomics-II course; though, at a basic level, it is complete in itself. It develops the subject up to the Neo-Classical synthesis of Keynesian and Classical frameworks via the monetarist supply curve. The treatment expected is through development of algebraic models using specific linear macro relationships right to the derivation of fiscal and monetary policy multipliers in the ISLM framework. The multipliers are also expected to be derived using differential calculus techniques in the AS-AD framework. The inter-relationships between monetary, fiscal and exchange rate policies will be stressed at a basic level. Module 1: Macroeconomic Variables (12 sessions) Macroeconomic Variables National Income Accounts Flow-of-Funds Accounts Social Accounting Matrices Some Key Identities Sectoral and Economy-wide Budget Constraints Module 2: Determination of National Income and Price Level (12 Sessions) Keynesian Models of National Income Determination IS-LM Analysis Fiscal and Monetary Policy Multipliers Phillips Curve and the Monetarist Phillips Curve AS-AD Model the Neo-Classical Synthesis dynamic aggregate supply curve Module 3: Open-Economy Macroeconomics (12 Sessions) Balance of Payments Exchange Rate Regimes Mundell-Fleming Model under Fixed and Flexible Exchange Rates Exchange Rate Overshooting Purchasing Power and Interest Rate Parities Automatic Adjustment Adjustment Policies: External versus Internal Balance Module 4: Micro-foundations of Macroeconomic Relationships (12 Sessions) Consumption Analysis: Permanent Income and Life-Cycle Hypotheses Consumption under Uncertainty Savings in Inter-temporal Models Investment Functions: Neo-Classical and Keynesian Money Demand Money Supply Process: Money Multiplier Essential Texts 1. Rudiger Dornbusch, Stanley Fischer and Richard Startz, Macroeconomics, 9e, Tata McGraw-Hill Publishing Co. Ltd., New Delhi, 2004. 2. David Romer, Advanced Macroeconomics, 2e, McGraw-Hill International Edition, 2001. 3. Ben J. Heijdra and Frederick Van Der Ploeg, Foundations of Modern Macroeconomics, Oxford University Press, Oxford, 2002. Additional Reading 1. Lance Taylor, Reconstructing Macroeconomics, Harvard University Press, Cambridge, Mass., 2004

Mathematics for Economists 1. 2. Semester: I Number of Credits: 4

Module 1: Elements of logic Necessary and sufficient conditions, theorems and proofs (direct, contrapositive); elements of set theory, relations and functions, vectors in Rn , open and closed sets in Rn, convex sets in Rn and their properties, bounded sets, compact sets; continuity, sequences, convergent and bounded sequences in Rn, Weierstrass Theorem, Brouwers Fixed Point Theorem, concave and quasi concave functions Module 2: Introduction to Integral and Differential Calculus Rules of differentiation, transcendental functions, total and partial derivatives, Youngs Theorem, Eulers Theorem, homogeneous functions; integration: definite and indefinite integrals, integration by parts Module 3: Introduction to Matrices Types of matrices, operations on matrices, determinants, eigen values and eigen vectors, quadratic forms: definite and semi-definite forms, economic applications (primal and dual in LPP), elementary differential and difference equations Module 4: Static Optimization First and second order conditions for local interior optima, (Unconstrained local global theorem), concavity and uniqueness, sufficient conditions for unique global optima, constrained optimization with Lagrange multipliers, second order conditions, sufficient conditions for optima with equality constraints, inequality constraints, Kuhn Tucker conditions, Envelope Theorem, duality, calculus of variations and the Euler equation, Elements of dynamic optimization: the Hamiltonian Essential Texts 1. A.C. Chiang, 2005, Fundamental Methods of Mathematical Economics , McGraw-Hill 2. A.C. Chiang, 1992, Elements of Dynamic Optimization, McGraw-Hill Additional Reading 1. K. Binmore. 1980, Foundations of Analysis, Books 1 & 2, Cambridge University Press 2. M. Intriligator, 1971, Mathematical Optimization and Economic Theory, SIAM 3. R. Sundaram, 1999, A First Course in Optimization Theory, Cambridge University Press

Basic Econometrics 1. 2. Semester: I Number of Credits: 4

Module 1: Basics of Statistical Inference Data Issues: time series, cross section and panel data Ideas of Probability and distribution functions - Mathematical expectation, Law of large numbers (without proof) Central limit Theorem (without proof) Properties of estimators: point versus interval estimation Hypothesis Testing Module 2: The Regression Model The classical linear regression model: theory of least squares - Gauss Markov theorem - Statistical properties of the least square estimator in finite samples Inference and prediction - dummy variables - distributed lags restricted least squares Module 3: Violation of the Classical Assumptions Problem of Heteroscedasticity and Autocorrelation - Remedial Measures Multicollinearity and specification issues Module 4: Time Series Modeling ARIMA Modelling: Box-Jenkins approach (identification, estimation and diagnostic testing) Unit Roots and Cointegration: Data Generating Processes, Dickey-Fuller and Phillips-Perron approaches to unit root tests Essential Texts 1. William Enders: Applied Econometric Time Series, Wiley, Second Edition, 2003 2. William E. Griffiths, R. Carter Hill, George G. Judge: Learning and Practicing Econometrics, Wiley, 1993, Paperback edition. 3. Damodar Gujarati: Basic Econometrics, McGraw-Hill, Fourth Edition, 2002 4. Jan Kmenta: Elements of Econometrics, McMillan Publishing, Second Edition, 1990

1. 2.

Indian Economy: Status And Current Issue Semester: I Number of Credits: 2

Preamble and Explanatory Notes: This course will be taught as two half courses in semesters I and II and will carry four credits (2+2 = 4). Whilst there could be project and student seminar component, the main mode of teaching will be the lecture method. Since different sectors of the Indian economy are covered, it is expected that many faculty members will be involved in its teaching, although there could be a single coordinator who shall ensure proper teaching of the course. The current course has being designed keeping in view the commonly held (and perhaps legitimate) refrain that our students are not familiar with the Indian economy and hence are not able to discuss qua economists issues related to the Indian economy. The specific learning objective of this course is to acquaint students with the status of Indian economy as a whole as well as in terms of sectors. Further it is to equip them with wherewithal to enable them to meaningfully participate in debates regarding issues and concerns about the Indian economy. Whilst the formal course content deals with recent happenings, it is expected that the course coordinator will spend a few lectures talking about where we come from, by way of background. Also before the second semester course some time will be spent discussing the reforms process in general. Again, the students will be expected to do a bit of reading in both these regards, however no questions will be set in the examination on these matters. Indian Economy Paper I

Semester 1: 2 credits
Module 1 Recent trends in important macro-economic variables (Population, GDP, SDP, Tax Revenue, Fiscal Deficits, Money Supply, Credit, Inflation, Exports/Imports, FDI, Employment) - Important ratios Regional variations (where relevant) Sectoral aspects. Module 2 State of Infrastructure Physical Infrastructure Transport (roads, railways, waterways, aviation), Energy, Telecommunication, IT Social Infrastructure Health and Education Technology and R&D Module 3 Recent trends in the state of social aspects of India Economy Human development Index Rural-Urban divide Poverty Index Child labour Informal sector Gender aspects Natural Resources - Environmental aspects. Regional variations. Module 4 Globalization, Economic reforms and Governance WTO and GATT Federalism Decentralization State and Local Governments Essential Reading 1. Acharya, Shankar, India's Economy: Some Issues and Answers, Academic Foundation, 2003 2. Bardhan, Pranab Poverty, Agrarian Structure and Political Economy in India: Selected Essays, Oxford University Press, 2003 3. Drze, Jean & Amartya Sen, India: Development and Participation, Oxford University Press, 2002 4. Joshi, Vijay & I. M. D. Little, India's Economic Reforms: 1991-2001, Oxford University Press. 5. Kahkonen, Satu & Anthony Lanyi (Eds.) Institutions, Incentives and Economic Reforms in India, Sage Publications 6. Kelkar, Vijay L. & V. V. Bhanoji Rao, India - Development Policy Imperatives, Tata McGraw-Hill Publishing Co. Ltd., 1996

Additional Reading 1. Bhaduri, Amit, Development with Dignity, National Book Trust, 2006 2. Bhalla, G.S., Indian Agriculture Since Independence, National Book Trust, 2006

3. Dasgupta, Monica, L. C. Chen & T. N. Krishnan (Eds.), Health, Poverty and Development in India, Oxford University Press, 1996 4. Gulati, Ashok & Tim Kelley, Trade Liberalization and Indian Agriculture, Oxford University Press, 1999 5. India Social Development, Oxford University Press, 2006 6. National Institute of Urban Affairs, Financing Urban Infrastructure in India (Research Study Series No. 59), NIUA, New Delhi 7. India Vision 2020, Planning Commission, Academic Foundation, 2004 8. Rao, CH Hanumantha, Agriculture, Food Security, Poverty and Environment: Essays on Post-Reform India, Oxford University Press, 2005 9. Sivsubramanian, S., The Sources of Economic Growth in India: 1950-1951 to 1999-2000, Oxford University Press, 2004 10. Vyas, VS, Indias Agrarian Structure: Variations on a theme, Academic Press, 2005

Sem 2
Microeconomics II 1. 2. Semester: II Number of Credits: 4

This is a one-semester course taught over 48 one-hour sessions. The course is divided into four modules of 12 sessions each. The method of instruction will be exclusively lectures. The objective is to introduce students to advanced themes in modern microeconomics. Several of the assumptions made in Microeconomics 1 will be relaxed. These include a) allowing for strategic interaction, (module 1) b) allowing for asymmetric, incomplete and imperfect information, (module 2) c) relaxing the assumption of the competitive economy (module 3) d) allowing for bounded rationality, transactions costs , imperfectly specified property rights (module 4). Module 1: Strategic Behaviour Specification of a game, normal form and extensive form games, information sets, solution concepts including Nash equilibria, subgame perfection and other refinements, repeated games, elements of cooperative game theory and bargaining games Module 2: Asymmetric Information Moral Hazard and Adverse Selection, signaling and screening, principal- agent models, optimal contracts, bargaining and auctions. Module 3: Industrial Organisation and Market Structures Cournot, Bertrand and Stackelberg models (one-shot as well as repeated), Dixit-Stiglitz model, monopoly and deadweight loss, first, second and third degree price discrimination, public utility pricing, games of entry deterrence, credit and the age of the firm: The Diamond model, regulation of competition. Module 4: The Microeconomics of Institutions Neoclassical and non neoclassical approaches, contestable markets, Transactions costs, bounded rationality, asset specificity, institutions as minimisers of transactions costs, new approaches to modeling the firm, property rights, power, gender, law and economics. Special Note Modules 2 and 3 can be done from a game theory perspective, in which case, 1,2 and 3 form a continuum. On the other hand, it is possible to do module 2 separately, borrowing from game theory, but mainly using a constrained optimisation and reaction curves framework. Module 3 uses Game Theory from module 1 and Information from module 2, with the exception of the material dealing with monopoly, where there is no strategic interaction. However, second degree price discrimination can still be dealt with as a revelation mechanism. By power in module 4 is meant a specific constellation of property rights. Gender here does not denote a biological category, but a situation where the standard assumption of equally empowered, rational atomistic individuals taking decisions might be inappropriate from an analytical point of view. Property rights and transactions costs become crucial here. Given the existence of transactions costs, it is still possible (as in the microeconomics of slavery) to think of contracts between agents, but these contracts will no longer have the optimal properties that contracts in a general equilibrium economy will have. Module 4 should be taught/learnt through case studies. Essential Texts 1. Samuel Bowles, 2004, Microeconomics: Behavior, Institutions and Evolution , Princeton: Princeton University Press 2. Thrinn Eggertsson, 1990, Economics of Institutions, Cambridge: Cambridge University Press 3. Eric Rasmusen, 2007, Games and Information, Oxford: Blackwell Publishing 4. Jean Tirole, 1988, The Theory of Industrial Organisation, Massachusetts: The MIT Press

Additional Reading 1. Alston, L.J., Eggertsson, T., North, D., 1996, Empirical Studies in the Economics of Institutions , Cambridge: Cambridge University Press 2. Herbert Gintis, 2000, Game Theory Evolving, Princeton: Princeton University Press

Macroeconomics II 1. 2. Semester: II Number of Credits: 4

Preamble Macroeconomics-II goes beyond the Neo-classical synthesis to separately consider the New Classical and New Keynesian frameworks as alternative macroeconomic paradigms. Growth analysis is explicitly introduced in intertemporal optimising models. The mathematical techniques required are of a higher order and some of the prerequisites are expected to be built up within Module 1. Romers Advanced Macroeconomics will be used as a bridge between Dornbusch, Fischer and Startz, Macroeconomics (used for Macroeconomics-I) and Blanchard and Fischer, Lectures in Macroeconomics (used for Macroeconomics II). Issues in policy analysis are explicitly considered in Module 4. Module 1: Growth Analysis and Inter-Temporal Models (12 sessions) Solow-Swan Model Infinite Horizon (Ramsey-Cass-Koopmans) model Basics of Overlapping-Generations (Diamond) Model Module 2: New Classical Macroeconomics and Real Business Cycles (12 sessions) Rational Expectations Equilibrium Models Lucas Critique Incomplete Information Models Persistence of Output Fluctuations Nelson-Plosser and Campbell-Mankiw Tests Search and Matching Models Real Business Cycle Theory Module 3: New Keynesian Theories of Business Cycles and Unemployment (12 Sessions) Nominal Rigidities and Economic Fluctuations Real Rigidities in Goods, Labour and Credit Markets Module 4: Macroeconomic Policy Issues (12 Sessions) Macroeconomic Policy Issues Targets, Indicators and Instruments Activist Policy Gradualism versus Shock Therapy Rules versus Discretion Role of Credibility Dynamic Inconsistency Problem Inflation Targeting Seignorage Barro-Ricardo and Blinder-Solow Hypotheses Political Economy of Stabilisation and Adjustment Essential Texts 1. David Romer, Advanced Macroeconomics, 2e, McGraw-Hill International Edition, 2001. 2. Olivier Jean Blanchard and Stanley Fischer, Lectures on Macroeconomics, Prentice-Hall of India Pvt. Ltd., New Delhi, 2000 3. Ben J. Heijdra and Frederick Van Der Ploeg, Foundations of Modern Macroeconomics, Oxford University Press, Oxford, 2002. Additional Reading 1. Lance Taylor, Reconstructing Macroeconomics, Harvard University Press, Cambridge, Mass., 2004

Development Economics 1. 2. Semester: II Number of Credits: 4

Preamble The objective of the course is to introduce students to existing academic approaches that grapple with the complexity of developing countries. To that end, the syllabus presents some of the major economic ideas in development thinking, and builds on and extends the microeconomic and macroeconomic tools developed in earlier core courses, additionally incorporating alternative perspectives that merit close scrutiny. Module 1: Concepts and measures of growth and development Developments in economic thought History, expectations and development Economic growth and structural change Planning and Growth - HDI, GDI, etc. Inequality and development Capabilities, entitlements and deprivation Institutions and development Market and State (12 lectures). Module 2: Modern theories of growth and distribution Harrod-Domar and Neo-Keynesian growth models Approaches to technical change Convergence Endogenous growth models Human capital (12 lectures). Module 3: Microeconomics of development Segmentation of rural land, labour, capital and credit markets Market inter-linkages Poverty, unemployment, under-nutrition, migration, labour markets and households Population and poverty Gender issues Development and the constraint of natural resources (12 lectures). Module 4: Macroeconomics of development Rural and Urban The Dualistic economy: W.A. Lewis and after Financial repression - Capital inflows and volatility Trade and foreign exchange Two-gap and Three-gap models International debt Role of international financial and trade institutions Structural adjustment (12 lectures) Essential Reading 1. Basu, Kaushik(1998), Analytical Development Economics, OUP, New Delhi. 2. Ray, Debraj (2004), Development Economics, OUP, New Delhi. Additional Reading 1. Agnor, P. and P. J. Montiel (1999), Development Macroeconomics. 2. Bardhan, P. and Christopher Udry, Development Microeconomics. 3. Behrman, JR and TN Srinivasan, (1995), Handbook of Development Economics, Elsevier. 4. Foley, Duncan K. and Thomas R. Michl, (1999), Growth and Distribution, Harvard University Press. 5. Hayami, Yujiro (2001) Development Economics: From the Poverty to the Wealth of Nations, OUP, Great Britain. 6. Human Development Reports 7. Sen, Amartya (1999), Commodities and Capabilities, OUP, New Delhi.

Public Economics 1. 2. Semester: II Number of Credits: 4

Course Description The focus of the course, which draws on Microeconomic theory, is on the development of analytical tools and their application to key issues relating to the spending, taxing and financing activities of government. Students would be expected to write a short research paper. The topic of the assignment would be outside of what has been taught in the classroom. Prerequisites: Fundamental Theorems of Welfare Economics; First and Second Best Analysis; Differential Integral and Calculus Module 1: Government in a Market Economy (10 hours) Rationale for State Intervention Market Failures and Externalities Tax and Regulation Distribution Social Choice - Social Welfare Function Arrow Impossibility Theorem (with proof). Module 2: Public Expenditure: Rationale and Evaluation (14 hours)

Public Goods: Pure and Local Optimal provision Preference revelation mechanism Private provision of Public
Goods - Merit Goods.

Clubs and Club Goods: Institutional forms and Clubs; Game Theory and Club Goods; Uncertainty and the Theory
of Clubs - Intergenerational Clubs

Evaluation of Government Expenditure: Welfare Foundations of Cost Benefit analysis - The technique of CBA CBA in practice - Some case studies in CBA. Module 3: Taxation and Public Sector Pricing (14 hours) Sources of Government Revenue: Tax and Non-tax sources - User Charges Government Debt. Basic Concepts of Tax Theory: Excess Burden Tax Incidence Tax/Subsidy capitalization First Best Principles of Taxation: Ability to Pay - Horizontal and Vertical Equity.

Second Best Theory of Taxation: Second Best Theory of Taxation with General Production and Many Consumers Optimal Commodity Taxation - Taxation under Asymmetric Information - Optimal Income Taxation. VAT: Tax Base Different Variants of VAT - Border Tax Adjustments. Public Sector Pricing: Pricing and Efficiency Marginal Cost Pricing - Ramsey Pricing Price Regulation Regulating Marginal and Ramsey Prices. Module 4: Reforms and Government (10 hours) Need for Reform: Unsustainability of the fisc -Time Consistency Problem Credibility and Commitment Fiscal Rules: Rationale - International and Indian Experience Privatisation: Ownership and Incentives Ownership and Economic Efficiency

Decentralisation: Decentralisation Theorem - International and Indian Experience Administrative Efficiency: Role of Bureaucracy
Essential Texts 1. Atkinson A.B. and J. E. Stiglitz: Lectures on Public Economics, New York: McGraw-Hill, 1980 2. Cullis J. and P. Jones: Public Finance and Public Choice, OUP, 1998 3. Newbery, D. and N. Stern (eds.) The Theory of Taxation in Developing Countries , OUP, 1987 4. Tresch R.: Public Finance: A Normative Theory, Academic Press, 1995 Additional Readings 1. Bos D. Pricing and Regulation: an Economic theory for Public Enterprises and Public Utilities, Elsevier Science, Amsterdam, 1994 2. Gang I. and A. Dasgupta: Value Added Tax Evasion, Auditing and Transactions Matching in John McLaren (ed.) Institutional Elements of Tax Design and Reform, World Bank 2002. 3. Kopits G.: Fiscal Policy Rules for India, Economic and Political Weekly, March 3, 2001 4. Niskanen William: Bureaucracy and Public Economics, Edward Elgar, 1995

5. Oates W. An Essay on Fiscal Federalism, Journal of Economic Literature, September 1999, vol. 37 6. Vickers J. and G. Yarrow: Privatisation: An Economic Analysis, The MIT Press, 1988.

Indian Economy: Paper II 1. 2. Semester: II Number of Credits: 2

Module1. Critical Appreciation of Public Economic Fiscal Policies FRB Tax/Expenditure Reforms Recent Budgets (2/3 years) Public Sector Disinvestment PDS Monetary/ Credit Policy Initiatives. Module 2 Critical Appreciation of Financial Sector Reforms Banking and Capital Markets External Sector Trade and Exchange rate.. Module 3 Critical Appreciation of recent sectoral policies Agriculture, Industry, Labor Market Module 4 Recent policies in Social sector Caste, Gender and Environment sensitive policies Poverty alleviation programs Infrastructure policies. Essential Reading 1. Acharya, Shankar, India's Economy: Some Issues and Answers, Academic Foundation, 2003 2. Bardhan, Pranab Poverty, Agrarian Structure and Political Economy in India: Selected Essays, Oxford University Press, 2003 3. Drze, Jean & Amartya Sen, India: Development and Participation, Oxford University Press, 2002 4. Joshi, Vijay & I. M. D. Little, India's Economic Reforms: 1991-2001, Oxford University Press. 5. Kahkonen, Satu & Anthony Lanyi (Eds.) Institutions, Incentives and Economic Reforms in India, Sage Publications 6. Kelkar, Vijay L. & V. V. Bhanoji Rao, India - Development Policy Imperatives, Tata McGraw-Hill Publishing Co. Ltd., 1996 Additional Reading 1. Bhaduri, Amit, Development with Dignity, National Book Trust, 2006 2. Bhalla, G.S., Indian Agriculture Since Independence, National Book Trust, 2006 3. Dasgupta, Monica, L. C. Chen & T. N. Krishnan (Eds.), Health, Poverty and Development in India, Oxford University Press, 1996 4. Gulati, Ashok & Tim Kelley, Trade Liberalization and Indian Agriculture, Oxford University Press, 1999 5. India Social Development, Oxford University Press, 2006 6. National Institute of Urban Affairs, Financing Urban Infrastructure in India (Research Study Series No. 59), NIUA, New Delhi 7. India Vision 2020, Planning Commission, Academic Foundation, 2004 8. Rao, CH Hanumantha, Agriculture, Food Security, Poverty and Environment: Essays on Post-Reform India, Oxford University Press, 2005 9. Sivsubramanian, S., The Sources of Economic Growth in India: 1950-1951 to 1999-2000, Oxford University Press, 2004 10. Vyas, VS, Indias Agrarian Structure: Variations on a theme, Academic Press, 2005