DEPARTMENT OF ECONOMICS
UNIVERSITY OF DELHI
Subject: BA(H) Economics - DSC
Semester: IV
Course & Code: Intermediate Macroeconomics II: Policy Issues ECON011
Duration (per week): 3 lectures + 1 tutorial per week
Date & Time: 29/01/2024 at 1.30 PM
Venue: 116, Department of Economics, Delhi University
Convenor: Dibyendu Maiti
College Teachers present:
Archana Aggarwal Hindu College
Rakesh Kumar Dyal Singh College
Sangeeta Lady Shri Ram College for Women
Shravasti Soni Indraprastha College for Women
Saachi Bhutani Bhagat Daulat Ram College
Pallavi Manchanda Shaheed Bhagat Singh College
Sneha Bhardwaj Deshbandhu College
Anuradha Gulati Dasgupta Shri Ram College of Commerce
Jagadish Konthoujam Shri Ram College of Commerce
Sona Mandal Kamala Nehru College
Suvojit Lahiri Chakravarty Aryabhatta College
Ashutosh Das Ramjas College
Lokendra Kumawat Ramjas College
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Learning Objectives
• This course trains the students in policy issues faced by macroeconomists in the real world.
• It discusses monetary and fiscal policy issues and exchange rate dynamics.
• It also introduces the students to the financial system and dynamics of financial crises.
• The students are introduced to macroeconomic concepts in the context of open economies and
the policy issues therein.
Learning outcomes
This course enables students to analyse the functioning of macroeconomic policies in the real world in
both closed and open economies and understand the dilemmas faced by policymakers in the domestic
and globalised economies.
Reading List
UNIT I: Fiscal and monetary policies (15 hours)
Active or passive monetary policies; time inconsistency; monetary policy objectives and targets; rules
versus discretion; IS-PC-MR model; fiscal policy; the government budget constraint; government debt and
Ricardian equivalence.
a) Blanchard and Johnson, Section 22.2, 23.2, 23.3, 23.4 (excluding discussion on Money Finance),
24.3
b) Carlin and Soskice, Chapter 3 (excluding Appendix; no direct questions to be asked from sections
1.1 to 1.5).
UNIT II Financial markets and crisis (05 hours)
Introduction to financial markets, Financial crises and liquidity trap
a) Blanchard and Johnson, Chapter 9.
UNIT III: Issues in open economy (20 hours)
Short-run open economy models; Mundell-Fleming model; Exchange rate determination; purchasing
power parity; asset market approach; Dornbusch‘s overshooting model; monetary approach to balance
of payments; International financial markets.
a) Dornbusch and Fischer, Chs.6 and 20 (20.1 and 20.2).
b) D. Salvatore, Ch.14 (14.1–14.6D and appendix), Ch.15 (including appendix) and
Ch.20.6.
Recommended readings
• Blanchard, O and Johnson David R. (2013), Macroeconomics, 6th ed. (Global ed.), Pearson
Education.
• Salvatore, D. (2007), International Economics 8th ed., Wiley.
• Dornbusch, R. and Fischer, S. (1994), Macroeconomics, 6th ed. McGraw-Hill.
• Carlin, Wendy and Soskice, David (2006), Macroeconomics: Imperfections, Institutions & Policies.
Indian Edition, Oxford University Press.
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Assessment
1. Semester-end Examination: 90 marks
The question paper will have roughly 50% weightage from unit 3 and the remaining 50% from units 1 and
2 together. The paper will consist of three sections of 30 marks each:
• Section A will have 15 MCQs/one-line-answer questions of 2 marks each, with no choice of any
kind.
The question paper will have clear instructions for this section that students must write only
the correct answers in this section and NOT explanations.
• In Section B, students will be required to do any 6 out of 8 questions for 5 marks each.
• In Section C, students will be required to do any 3 out of 4 questions of 10 marks each.
2. Continuous Assessment (40 marks) and Internal Assessment (30 marks): As per the University
guidelines.
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