Semester-V

International Economics

Paper: ECO-A-CC-5-11-TH

1. Absolute and Comparative Advantages of Trade

• Adam Smith‘s theory of absolute advantage.

• David Ricardo‘s theory of comparative advantage.

• Arbitrage as the basis and direction of trade; fundamental sources of cross-country price differences and arbitrage-concept of comparative advantage; externalities, regulation and perverse comparative advantage

• One factor economy, production possibility frontier, relative demand and relative supply, terms of trade, trade in the Ricardian world, determination of intermediate TOT, complete vs incomplete specialization, complete specialization and gains from trade.

2. The Building Blocks of Trade Theory

• The concept of community indifference curve-Justification and properties.

• The need for trade indifference curves, derivation of trade indifference curves, properties of trade indifference map, Offer curves and its properties. Three important elasticities- the elasticity of offer curves, the elasticity of demand for imports, the elasticity of supply of exports. International equilibrium and offer curves, terms of trade (TOT) and stability, the Marshall-Lerner condition, Gains from Trade (GFT) theorem, illustration of GFT, decomposition of GFT, substitution possibilities and magnitude of GFT.

• Production structure for neo-classical trade models, role of constant returns to scale, the concept of unit isoquants, duality in the production structure, significance of the envelope condition in trade models

3. Factor Endowment and Trade (Heckscher-Ohlin-Samuelson Model)

• Heckscher-Ohlin (HO)theorem and price vs physical definitions of relative factor abundance.

• Role of homotheticity of tastes in the context of physical definition

• Factor Intensity Reversal in the context of price and physical definitions and invalidity of HO Theorem.

• Factor intensity ranking, one-to-one correspondence between commodity price ratio & factor price ratio (Stolper-Samuelson theorem), One to one correspondence between endowment ratio and production proportion ( Rybczyski theorem) .

• The Factor Price Equalization Theorem. Factor price equalization and complete specialization.

• Incomplete Specialization, Factor price equalization and Factor Intensity Reversal

• Empirical studies- Leontief Paradox.

4. Applications of Neo-classical Trade Models for developing countries

• Jones (1965) Heckscher-Ohlin type 2x2(two factors-two commodities) full employment model for small open developing economies. Basic structure –significance of the assumption of constant returns to scale- the decomposability property-the capital intensity condition in physical and value terms- Implications of Stolper-Samuelson and Rybczynski theorems-the price and output magnification effects.

• Jones (1971) 3x2(three factors-two commodities) specific-factor model. Basic structure-significance of the assumption of constant returns to scale-the indecomposability property. Implications of price magnification effects in specific factor model.

5. Trade Policy

• Partial Equilibrium Analysis of Tariff - cost–benefit, Quota, Quota- Tariff equivalence & non-equivalence, monopoly effects of quota, subsidy and voluntary export restraint.

• General Equilibrium Analysis- distinction between large and small economy, welfare effects of a tariff on small country and large country. Tariff ridden offer curve, Tariff war, Optimum tariff for large economy, Metzler‘s Paradox.

6. Open Economy Macroeconomics and Balance of Payments

• Determination of equilibrium income in open economy. Foreign Trade Multiplier with & without repercussion effects.

• Balance of Payment accounts in an open economy. Autonomous and accommodating transactions.

• Fixed &Flexible Exchange Rates: adjustment of demand and supply of Foreign Exchange, Effect of devaluation, The Mundel-Fleming Model (IS LM BP model)

Indian Economy

Paper: ECO-A-CC-5-12-TH

1. Economic Development since Independence

• Growth and development under different policy regimes (from planning to market based development)

  • Objectives, achievements and failures of Planning

  • Economic crisis during the late 1980s

  • Economic Reforms –Critical Analysis

• Structural changes in the post-reforms period

• Regional variation of growth and development

2. Population and Human Development

• Demographic trends and issues

  • Education and health:Basic problems and Government measures, Right to Education (RTE) Act 2009

3. Growth and Distribution

• Trends in GDP and per capita GDP

• Growth, poverty and inequality

• Youth unemployment (School Transition to Work)

• Policy perspectives in growth and distribution

4. Economic Reforms in India

• Banking sector reforms

• Reforms in tax policy

• Reforms in the external sector

• Reforms in Labour market

Paper: ECO-A-CC-5-12-TU

Tutorial Based Term Paper Contact Hours: 15 (for review classes, presentation by the students) A term paper is to be prepared by the student under Tutorial Based Term Paper on any topic under the four broad themes covering the syllabus for the tutorial. Term paper should cover a literature survey of the topic along with a critical evaluation of the policy measures undertaken in the Indian context to tackle the specified problem. It should be prepared under a full time teacher of the subject belonging to the institution. All total 15 hours are allotted for a term paper. It is to be evaluated (all total 15 marks) jointly by an internal and an external examiner(if it is permitted under University rules) on the basis of the content of the term paper along with viva-voce on the term paper.

Discipline Specific Elective- A(1)

Applied Econometrics (AE)

Paper: ECO-A-DSE-5- A(1) –TH

1. Steps in empirical research

• Use of econometric models in empirical research – some basic concepts

• The basic commands in Stata / R

2. Regression Diagnostics and Specification

• Misspecification

• Functional forms

• Model selection

• Application with Stata / R

3. Application of Regression Analysis

• Cross section analysis – Linear regression model with two regressors (by using survey data like NSSO with Stata / R)

• Time series analysis (very preliminary level) – Basic concepts of time series, Estimating linear trend (by using NAS with Stata / R)

• Panel data analysis – basic concepts of fixed effects model; random effects model – (Application with Indian Official Statistics using Stata / R)

Paper: ECO-A-DSE-5-A(1)-P

Practical Paper:

Applications of use of softwares STATA or R will be demonstrated in the computer laboratory in practical classes and the practical examination will be conducted in the usual manner as mentioned in CSR.

Discipline Specific Elective- A(1)

Economic History of India (1857- 1947) [EHI]

Paper: ECO-A-DSE-5-A(1) –TH

1. Impact of British rule on India

• Deindustrialization

• Commercialization of agriculture

• Economic Drain

2. Aspects of Economic Policies in British India

• Land policy

• Policy of Discriminating Protection

• Early Industrial Development and Managing Agency System

• Currency and monetary policy

• Development of Infrastructure – Railways

Discipline Specific Elective- B(1)

Comparative Economic Development (1850- 1950) [CED]

Paper: ECO-A-DSE-5-B(1)-TH

1. Strategies and Policies for Economic Development

• Laissez-faire and free trade

• Strategy of industrialization in Soviet Union.

2. Regions of contemporary development

• Success stories of Asia : Japan, South East Asia and China

• Crisis and failures of Latin America and Africa

Discipline Specific Elective-B(1)

Financial Economics (FE)

Paper: ECO-A-DSE-5-B(1)-TH

1. Investment Theory and Portfolio Analysis

• Deterministic cash-flow streams: Basic theory of interest; discounting and present value; internal rate of return; evaluation criteria; fixed-income securities; bond prices and yields; interest rate sensitivity and duration; immunisation; the term structure of interest rates; yield curves; spot rates and forward rates.

• Single-period random cash flows: Random asset returns; portfolios of assets; portfolio mean and variance; feasible combinations of mean and variance; mean-variance portfolio analysis: the Markowitz model and the two-fund theorem; risk-free assets and the one-fund theorem.

• CAPM: The capital market line; the capital asset pricing model; the beta of an asset and of a portfolio; security market line; use of the CAPM model in investment analysis and as a pricing formula.

2. Options and Derivatives

• Introduction to derivatives and options; forward and futures contracts; options; other derivatives; forward and future prices; stock index futures; interest rate futures; the use of futures for hedging; duration-based hedging strategies; option markets; call and put options; factors affecting option prices; put-call parity; option trading strategies: spreads; straddles; strips and straps; strangles; the principle of arbitrage; discrete processes and the binomial tree model; risk-neutral valuation.

3. Corporate Finance

• Patterns of corporate financing: common stock; debt; preferences; convertibles; Capital structure and the cost of capital; corporate debt and dividend policy; the Modigliani- Miller theorem.