Semester-IV

Intermediate Microeconomics-II

Paper: ECO-A-CC-4-8-TH

Unit 1: Imperfect Market Structure

• • Monopoly and barriers to entry- output determination and price rule, measure and sources of monopoly power, social costs of monopoly power-deadweight loss

  • Pricing with market power- first, second and third degree price discrimination, multiplant monopoly

  • Monopolistic competition- short run and long run equilibrium, excess capacity

  • Oligopoly- Oligopoly equilibrium as Nash equilibrium, Cournot, Bertrand and Stackelberg Model- use of isoprofit curves and simple game theoretic interpretation. Sweezy‘s kinked demand curve model and non-collusive equilibrium. Competition versus collusion- the Prisoners‘ Dilemma. Collusive Oligopoly –Cartels and Price Leadership

Unit 2: Input market under Imperfect Competition

• • Monopsony, bilateral monopoly in labour market

Unit 3: General Equilibrium, Efficiency and Welfare

• • General Equilibrium and Economic Efficiency- Exchange, production and welfare, Pareto Optimality, Edgeworth box and contract curve, Pareto efficiency and perfect competition

  • Reasons for Market failure, Pareto efficiency and market failure (externalities and public goods), property right and Coase Theorem

  • Markets with asymmetric information-adverse selection, moral hazards, agency problems

Intermediate Macroeconomics-II

1. Basic Tenets of New Classical and New Keynesian Theories

• • New Classical Theory-The concept of rational expectations and the theory of real business cycle-introductory ideas

  • New Keynesian Theory- nominal rigidities and real rigidities, rigidities in interest rates and credit rationing-introductory ideas

2. Macroeconomic Foundations -II

• • Consumption: Keynesian consumption function; Fisher‘s theory of optimal intertemporal choice; life-cycle and permanent income hypotheses; Dusenberry‘s relative income hypothesis; rational expectations and random-walk of consumption expenditure.

  • Demand for money: Regressive Expectations and Tobin‘s portfolio choice models; Baumol‘s inventory theoretic money demand.

3. Economic Growth

• • Harrod and Domar models of economic growth.

  • Solow one sector growth model-golden rule- -dynamic efficiency.

  • Technological progress

  • Elements of endogenous growth theory-basic ideas-the AK model

Introductory Econometrics

Paper: ECO-A-CC-4-10-TH

1. Nature and Scope of Econometrics

• • Distinction between Economic Model and Econometric model

  • Concept of stochastic relation, Role of random disturbance in econometric model

  • Types of data

  • Application of Econometrics in different branches of social science

2. Classical Linear Regression Model (Simple linear regression and multiple linear regression): part 1

• • The classical assumptions (basic interpretation)

  • Concepts of population regression function and sample regression function

  • Estimation of model by method of ordinary least squares (Derivation in simple linear model (SLRM) and multiple linear model (MLRM) with two regressors only)

  • Simple correlation, partial correlation and multiple correlation (Definition, and interpretation in the context of SLRM and MLRM)

• Limitations of SLRM and additional complications in MLRM

• Economic interpretations of the estimated model

3. Classical Linear Regression Model (Simple linear regression and multiple linear regression): part 2

• • Properties of the Least Squares Estimators (BLUE) in SLRM- Gauss-Markov theorem

  • Qualitative (dummy) independent variables – intercept dummy and slope dummy (only interpretation of the model)

  • Forecasting - Ex-post forecast and Ex-ante forecast, forecast error (only for two variable model)

4. Statistical inference in linear regression model

• • Use of standard normal, chi2, t, and F statistics in linear regression model

  • Testing hypothesis

  • Single test (t test and chi2 test) Joint test (F test)

  • Goodness of fit (in terms of R², adjusted R² and F statistic), Analysis of Variance (ANOVA)

  • Statistical significance and economic importance

5. Violations of Classical Assumptions

• • Multicollinearity - Consequences, Detection (Variance Inflationary Factor (VIF)) and Remedies

  • Heteroscedasticity - Consequences, Detection (Lagrange Multiplier test) and Remedies

  • Autocorrelation - Consequences, Detection (Durbin-Watsontest) and Remedies

6. Specification Analysis

• • Omission of a relevant variable

  • Inclusion of irrelevant variable

  • Tests of specification errors

  • Testing for linearity and normality assumptions

Skill Enhancement Course-II

Research Methodology

Unit 1 : Methodological Issues 1

• Locating the basic issues- theme based literature survey and motivation behind any study-objectives of the study-development of writing skills

• Designing the sampling frame in case of field survey- the role of pilot survey

• The role of random numbers in drawing random sample

• Methods behind preparation of questionnaire in case of field survey

• Data entry after field survey

• Tabular representation of data and graphs for data interpretation

Unit 2: Methodological Issues 2

• Theoretical and Empirical Research in Economics.

• Common sections of an ideal research paper in Economics.

• Illustrations of empirical research work. Reporting the regression results and interpretation of the results: the role of statistical inference.[ The course instructor should focus on framing the testable hypothesis and the role of statistical inference in empirical research]

• Illustrations of theoretical research: specification of the model, closing the model, checking stability of the model for meaningful comparative static results. [The course instructor should focus on the role of stability analysis in theoretical models by showing the method of linearizing non-linear differential equations. Illustrations can be made from IS-LM model by using trace and determinant conditions of the Jacobian matrix-the role of phase diagrams]

• Role of footnotes or end notes in a research paper

• Bibliography, reference and citation

• Writing the abstract of a research paper

• Key words and JEL Classification

• Presentation of a research paper through power point. Basic rules to be followed for a good presentation. Role of diagrams, graphs, pictures and charts.

Skill Enhancement Course-II

Managerial Economics

1. Demand, Cost and Profit Analysis

• Demand for durable and non durable products, demand forecasting techniques

• Cost estimation

• Cost-volume-profit analysis (break even analysis)- objectives and assumptions; determination of breakeven point, limitations of c-v-p analysis

2. Pricing Policies and practices

• Factors governing prices, price discounts and differentials, price forecasting

3. Capital Budgeting

• What is capital budgeting, need for capital budgeting, different steps in capital budgeting, Capital budgeting appraisal methods – payback method, accounting rate of return method, net present value method, interest rate of return method, benefit cost ratio method. Capital rationing, alternative methods of financing investments

4. Cost of capital

• Cost of debt capital, cost of share capital, cost of equity capital, cost of retained earnings

5. Inventory Management

• Inventory costs, concepts of average inventory, various inventory models- economic order quantity, optimum number of orders per year, optimum number of days supply per order.