Quantitative Methods for Economic Analysis II

Students of economics should have sound quantitative skills to collect, analyse and interpret empirical data. They also require these skills for advanced studies in quantitative economics. Quantitative skills have become an essential toolkit for most branches of economics.This course is intended to provide students an introduction to quantities methods and tools that are used in the study of economics at the undergraduate level. The aim of this course is to develop skill in statistical and mathematical techniques that are required for a meaningful study of applied economics and for carrying out empirical their further study in most branches of economics.

Module I: Market Structure: Perfect Competition Market-Functions-Market structure-Types of markets-Perfect competition-Characteristics-Demand AR and MR curves-Price determination in the market period- Short run equilibrium of the firm and industryShut down point-Long run equilibrium of the firm and industry-Constant, increasing and decreasing cost industries- Welfare effects of government intervention- Impact of a tax and subsidy. Module II: Monopoly Monopoly- Sources of monopoly-Types of monopoly-AR and MR curve of a monopolist - Short run and long run equilibrium- Supply curve of a monopolist- The multiplant firm- Monopoly power-Measurement of monopoly power-Social cost of monopoly- Regulation of monopoly -Price discrimination-First degree, second-degree and third degree- International price discrimination (Dumping- types)-Two part tariff, tying and bundling-Peak load pricing- Monopsony- Bilateral monopoly. Module III: Monopolistic Competition and Oligopoly:- Monopolistic competition- Features of monopolistic competition-Short run and long run equilibriumExcess capacity-Product differentiation and selling costs-Oligopoly-Characteristics- Collusive versus non-collusive oligopoly-Cournotmodel- Kinked demand curve model - Cartel and price leadership. Module IV: Pricing and Employment of Inputs Competitive factor markets: -Demand curve of the firm for one variable input-Demand curve of the firm for several variable inputs- Market demand curve for an input - Supply of inputs to a firm- The market supply of inputs- Equilibrium in a competitive factor market- Factor market with monopoly power- Factor market with monopsony power-Marginal Productivity theory of input demand. References: 1. Dominick Salvatore (2003): Microeconomics: Theory and Applications- 4th Edition, Oxford University Press. 2. Robert S Pindyck and Daniel L Rubinfeld (2009): Microeconomics- 8th Edition, Pearson India. 3. Watson and Getz (2004): Price Theory and its Uses- 5th Edition, AITBS Publishers and Distributors. 4. A Koutsoyiannis (1979): Modern Microeconomics- 2nd Edition, Macmillan. 5 .G S Madalla and Ellen Miller (1989): Microeconomics: Theory and Applications- Tata McGraw-Hill. 6. Robert Y Awh (1976): Microeconomics: Theory and Applications- John Wiley & Sons.

SYLLABUS Module I – Introduction to International Economics: Subject matter and importance of International Economics - Internal trade and International trade - Importance of International trade – International trade and economic development – Basic concepts - Terms of trade. Module II --- Theories of International Trade: Mercantilist approach to trade - Classical Theory: Absolute and Comparative Cost Advantage theories - Hecksher – Ohlin Theory and Leontief Paradox. Module III: Theory of Commercial Policy: Free trade - Arguments for and against free trade – Protection - Arguments for and against protection - Methods of Trade Restriction : Tariff and non-tariff trade barriers - Types of tariffs – New protectionism - export subsidy and countervailing duties - Dumping and anti-dumping duties – Economic Integration – WTO, EU, NAFTA, ASEAN, SAARC.Module IV --- Foreign Exchange: Foreign exchange market – functions - Defining foreign exchange and exchange rate – Exchange rate concepts – exchange rate changes (devaluation, revaluation, depreciation, appreciationovervaluation and undervaluation) – Different systems of exchange rate determination - fixed and flexible exchange rate – Hybrid exchange rate systems – Managed floating – Theories of exchange rate – Mint Parity theory – Purchasing Power Parity Theory – Balance of Payments Theory - Components of Foreign exchange . Module V --- Balance of Payments: Defining Balance of Trade and Balance of Payments - Structure of balance of payments – Equilibrium and disequilibrium in BOP – Measures to correct BOP disequilibrium – India‘s BOP since 1991 – International financial flows – Foreign Direct Investment and Porfolio Investment – Currency Convertibility – IMF-Role and Functions. Reference: 1. Salvatore, Dominick, ‗International Economics‘, Weily India, New Delhi. 2. C.P. Kindle Berger, ‗International Economics‘ 3. Bo Soderstein and Geoffrey Reed, ‗International Economics‘, Macmillan 4. Carbaugh, ‗International Economics‘, Cengage Learning 4. Francis Cherumilam - ‗International Economics‘ 5. Mannur, H.G. ‗International Economics‘ 6. Errol D‘Souza, ‗Macro Economics‘, Pearson Education 2008 (For BOP in India) 7. RBI Bulletin, Various issues

Syllabus Module I: Introduction to Macroeconomics Macroeconomics and its scope - Microeconomics and macroeconomics – Macroeconomic models – Types of variable: Stock and flow, endogenous and exogenous, exante and expost – Static, comparative static and dynamic – Equilibrium and disequilibrium.Module II: National Income National income concepts and their interrelationships: – GNP - Nominal versus real GNP - Potential versus Actual GNP – Green GNP - GNP deflator – NNP, GDP, NDP, NI, PI, and DPI – National income identity-two sector, three sector and four sector economy- Methods of estimating national income – Difficulties in the estimation of national income. Module III: Classical Macro Economic Model Classical macroeconomics:– Say‘s Law of Markets – Wage-price flexibility – Classical model of output and employment – Classical theory of price level detrminaiton – Quantity theory of Money – Fisher‘s Equation of Exchange – Cash Balance Approach - Neutrality of Money – Money illusion –Pigou effect – Real Balance effect – Classical dichotomy – Concept of full employment – voluntary unemployment.Module IV: Keynesian Theory and Income Determination: The background of Keynesian revolution – Principle of effective demand – Aggregate demand and its components – The consumption function – Fundamental Psychological Law – APC and MPC – Saving function – APS and MPS – The Investment function – Determinants of investment – Saving and Investment equality – MEC – MEI and roel of expectations – The multiplier – Income determination in two and three sectors (Keynesian croas diagram and algebra) – Role of government – fiscal policy – Objectives of fiscal policy - Instruments of fiscal policy – Fiscal multipliers – tax multiplier, government expenditure multiplier, and balanced budget multiplier – Inflationary and deflationary gaps – The concept of underemployment equilibrium – wage-price rigidity – Keyne‘s theory of employment. Module V: Theories of consumption fucnction: The absolute income hypothesis - the Relative income hypotheses - The permanent income and life cycle hypothesis – random walk hypotheses - The Ratchet effect.References: 1. Edward Shapiro – ‗Macro economics‘ Oxford University press. 2. Gregory Mankiw – ‗Macro economics‘ – 6th Edn. Tata McGraw Hill. 3. Richard T. Frogmen – ‗Macro economics‘, Pearson education. 4. Eugene Diutio – Macro economic Theory, Shaum‘s Outline series. Tata McGraw Hill 5. Errol D‘Souza – ‗Macro Economics‘ – Pearson Education 2008. 6. Abhijit Kundu (2009) : Methodology and Perspectives of Social Science – Pearson Education 8 Dernbusch, Fischer and Startz-MacroEconomics-Tata McGraw –Hill