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Content/ Syllabus: Unit wise course content distribution
Unit -1 Introductory Growth Models
Harrod Model of Growth – Domar Model of Growth – The Harrod – Domar model – assumptions – Implications – actual, warranted and natural rate of growth – knife edge instability problem and its economic implication – causes behind it – properties of warranted rate of growth - Comparison of Harrod and Domar Growth Models -Criticism.
Lecture Note-1 Introduction to Growth Theory- Notes
Lecture Note-2 Harrod Model SS Reading/Notes
Lecture 3 - Domar Model - Reading
Additional Notes- Criticism of H-D Model
Unit-2 Exogenous Growth Model
Solow Model – Absolute and Conditional Convergence – Steady State – Golden Rule of Capital Accumulation – Transition of the Golden Rule Steady State. - Constant Population growth and its impact on Steady State, Growth Accounting and Solow Residual , Introducing Constant Technological Progress in the Solow Model , Measuring Growth of Endogenous variables at Steady State .
Reading : (Economic Growth 1 ) , (Economic Growth 2 ) shashi1234
The Neo Classical Production function , Homogeneous and Homothetic function
Lecture Notes 2&3 based on Class task 2 - Link
Lecture notes -Solow Model with Constant Population growth - Link
Solow Model-80 percent Notes (Golden rule, Convergence, Growth accounting-incomplete coverage, follow class notes)
Detail - 1. - Production Concept, Homogeneous function, Neo-Classical Production function. Mathematics Revision, step to take out Growth rate for any variables.
2. Introduction and Development of Solow Model- with no population growth and no technical progress, determining Steady state, rate of growth of endogenous variable at Steady state.
3. Effect of Saving at Steady State (growth effect vs level effect)- in the case of no Population Growth, no Technical Progress and Impact of depreciation at Steady-state.
4. The Golden rule of capital accumulation- with No Population Growth and no Technical Progress , Transition to the Golden Rule Steady State.
5. Solow Model with constant population growth and no technical progress, Steady State and Golden rule of capital accumulation, Measuring Growth of Endogenous variables at Steady State.
6. Introducing Constant Technological Progress in the Solow Model , Measuring Growth of Endogenous variables at Steady State
7. Growth Accounting - decompose sources of growth and Solow Residual, Absolute and Conditional Convergence .
8. Existence, stability and non uniqueness of equilibrium
9. Case study and numericals
10. Difference between Solow Model and Harrod Domar model
Unit -3. Endogenous Growth Model
Introduction to Endogeneous Growth Theory, Basic AK Model - Notes
Unit -4. Trade and Development
Trade as an engine of growth – Terms of trade and economic development (Prebisch – Singer Thesis) – Imports substitution Vs export promotion.
Trade As An Engine Of Growth Video , Notes
Trade as an Engine of growth , Lecture overview Video
Prebisch Singer Thesis - Reading
Limitation of Prebisch- Singer thesis
Imports substitution Vs export promotion Reading
Comparison Imports substitution Vs export promotion-Notes
Arguments in favor and against ISP and EPP- Notes (Important)
References/ Suggested Readings
1. Barro, Robert and Xavier Sala-i-Martin: Economic Growth, 2nd Edition, MIT Press.
2. Charles I. Jones: Introduction to Economic Growth, 2nd Edition, Viva-Norton Student Edition, Viva Books
3. H.L Ahuja: Development Economics, 1st Edition, Chapters-13, 14, 17, 37, 38, S. Chand & Sons Private Limited
4. N. Gregory Mankiw: Macroeconomics, 7th Edition, Chapter-7, Economic Growth I: Capital Accumulation and Population Growth and Chapter-8, Economic Growth II: Technology, Empirics, and Policy, Pages 191-254, Worth Publishers.
5. Sampat Mukherjee: Macroeconomics: A Global Text, 1st Edition, Chapters 42, 43 & 44, New Central Book Agency (P) Ltd.
6. Felix Raj, Sampat Mukherjee, Mallinath Mukherjee, Amitava Ghose, Rajendra N. Nag: The Contemporary Development Economics (Adam Smith to Amartya Sen), 2nd Edition, Trade and Development, Chapter-18, New Central Book Agency.
Economics of Growth - Course learning Outcome
This course will introduce students to the growth theory in economics where they will learn the formal models that are dynamic in nature. The basic framework of growth theory revolves around the understanding that economic growth is the process of accumulation of capital. This course covers two framework of exogenous growth theory –keynesian growth theory which is recognized as harrod-domar model and neo-classical growth theory which is well-known as solow-swan model. Also in the course, endogenous growth theory (basic AK model) and the debate on the relevance of Trade as an engine of growth and development with emphasis on import substitution versus export promotion policies are discussed. This course provides an elementary introduction to growth theory where students are introduce with the requirement of long-run equilibrium called steady state, when the economy is growing.
In this course students will learn the different economic thought on important factors that determine long term growth. In the harrod-domar model long term equilibrium (Steady state condition where all variables are growing at the same rate) gives us a razor edge equilibrium and this arises due to constant capital output ratio. In this model growth can be increase permanently by increasing saving. Solow and Swan using neo-classical framework solve the instability problem in the harrod-domar model by considering capital output ratio to be endogenous. In the solow model factors of production demonstrate positive and diminishing return. However in the solow model increase in saving has only level effect and no growth effect. The argument of solow about long term growth depends on technical progress which is exogenous and so depends on non-economic factors. This argument remains unsatisfactory as no policy decision can be made to influence economics growth. Thus step were taken to introduce endogenous technical progress, in this regard first attempt in the form of AK Model was made by Frankel in 1962 by considering capital to be both in physical and human capital thus taking care of diminishing return to capital. In this basic version of endogenous growth theory economic growth can be increase permanently by increasing saving rate. Students in this course also learn about various models and debate related to whether trade can be considered as an engine of growth and development or not. This paper, although sophisticated students on large numbers chose it to understand the dynamics nature of economics. This course will form the foundation for students for advance courses in macroeconomics or growth theory at master and Ph.D. level
Internal assessment
1. Attendance, Class Participation and regular performance = 4 marks, Class tasks ( incentivemarks) = 5marks
Note: Class tasks/Class Assignment/Homework (6 in total) = 5 Marks (Incentive marks). Unit 1 & 4 = 1 marks each and Unit 2= 3 marks
3. Two internal exams - best of the two will be used for evaluation purposes. Weightage 6 marks.
First Internal Exam – In the 3rd Week of March (extended by two week on a/c of social event), 2022, MCQ Type. Students are not allowed to carry books, notes, photocopy in the internal exam. Allowed to appear only when attendance is 75%. Students whose attendance is below the acceptable level are required to submit application for not attaining classes with proper documentation to seat for the internal exam.
Second Internal Exam- In the 4th Week of May, 2022, Subjective type. Students are not allowed to carry books, notes, photocopy in the final internal exam. Allowed to appear only when attendance is above 60 %. Students whose attendance is below the acceptable level are required to take no objection from administrative office. They will be evaluated for 6 marks only for the Internal Exam
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