Economics PDF
Economics PDF
UNIVERSITY OF DELHI
DEPARTMENT OF ECONOMICS
SYLLABUS OF COURSES TO BE OFFERED
Discipline Courses I, Discipline Courses II
& Applied Courses
Note: The courses are uploaded as sent by the Department concerned. The scheme of
marks will be determined by the University and will be corrected in the syllabus
accordingly. Editing, typographical changes and formatting will be undertaken further.
Four Year Undergraduate Programme Secretariat
[email protected]
FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECONOMICS
TABLE OF CONTENTS
Page No.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
Course Readings: The nature of several of the courses is such that only selected readings
can be specified in advance. As in the past, reading lists will be updated and topic-wise
readings will be discussed in regular meetings organised by the Department of Economics,
Delhi School of Economics, with all college teachers of the University of Delhi associated
with teaching these courses.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 1
PRINCIPLES OF ECONOMICS
Course Description
This course is designed to expose the students to the basic principles of economics. The
emphasis will be on thinking like an economist and the course will illustrate how economic
concepts can be applied to analyse real-life situations.
Course Outline
1. Exploring the Subject Matter of Economics
Why study economics? The scope and method of economics; scarcity and choice; questions
of what, how and for whom to produce and how to distribute output; the basic competitive
model; prices, property rights and profits; incentives and information; rationing; opportunity
sets; economic systems, gains from trade; comparative advantage and trade.
Readings
1. N. Gregory Mankiw, Economics: Principles and Applications, India edition by South Western,
Cengage Learning India Private Limited, 4th edition, 2007.
2. Joseph E. Stiglitz and Carl E. Walsh, Economics, W.W. Norton & Company, Inc.,New
York, International Student Edition, 4th edition, 2007.
3. Andrew B. Abel and Ben S. Bernanke, Macroeconomics, Pearson Education, Inc., 7th edition,
2011.
4. N. Gregory Mankiw, Macroeconomics, Worth Publishers, 7th edition, 2010.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 2
3. Single-variable Optimization
Geometric properties of functions: convex functions, their characterizations and applications;
local and global optima: geometric characterizations, characterizations using calculus and
applications.
4. Integration of Functions
Areas under curves; indefinite integrals; the definite integral
Readings
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 3
Readings
1. Jay L. Devore, Probability and Statistics for Engineers, Cengage Learning, 2010.
2. John E. Freund, Mathematical Statistics, Prentice Hall, 1992.
3. Richard J. Larsen and Morris L. Marx, An Introduction to Mathematical Statistics and its
Applications, Prentice Hall, 2011.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 4
Readings
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ECON-DC I: PAPER 5
3. Hypothesis Testing
Defining statistical hypotheses; distributions of test statistics; testing hypotheses related to
population parameters; Type I and Type II errors; power of a test; tests for comparing
parameters from two samples.
Readings
1. Jay L. Devore, Probability and Statistics for Engineers, Cengage Learning, 2010.
2. William G. Cochran, Sampling Techniques, John Wiley, 2007.
3. Richard J. Larsen and Morris L. Marx, An Introduction to Mathematical Statistics and its
Applications, Prentice Hall, 2011.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 6
MICROECONOMICS-I
Course Description
This is the first part of the two part course, and is designed to provide a sound training in
microeconomic theory. This course looks at the behaviour of the consumer and the producer
and also covers the behaviour of a competitive firm.
Course Outline
1. Consumer Theory
Preference; utility; budget constraint; choice; demand; Slutsky equation; buying and selling;
choice under risk and intertemporal choice; revealed preference.
Readings
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 7
MACROECONOMICS-I
Course Description
This is the first part in the two part course and introduces the students to formal modelling of
a macro-economy in terms of analytical tools. It discusses various alternative theories of
output and employment determination in a closed economy in the short run as well as
medium run, and the role of policy in this context. It also introduces the students to various
theoretical issues related to an open economy.
Course Outline
1. The Closed Economy in the Short Run
Simple Keynesian model of income determination; IS-LM model; fiscal and monetary
multipliers.
1. Dornbusch, Fischer and Startz, Macroeconomics, McGraw Hill, 11th edition, 2010.
2. N. Gregory Mankiw. Macroeconomics, Worth Publishers, 7th edition, 2010.
3. Olivier Blanchard, Macroeconomics, Pearson Education, Inc., 5th edition, 2009.
4. Steven M. Sheffrin, Rational Expectations, Cambridge University Press, 2nd edition,
1996.
5. Errol D’Souza, Macroeconomics, Pearson Education, 2008.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 8
MICROECONOMICS-II
Course Description
This course is a sequel to Microeconomics I. It covers general equilibrium and welfare,
imperfect markets and topics under information economics.
Course Outline
1. General Equilibrium, Efficiency and Welfare
Equilibrium and efficiency under pure exchange and production; overall efficiency and
welfare economics.
3. Market Failure
Externalities; public goods and markets with asymmetric information.
Readings
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 9
MACROECONOMICS-II
Course Description
This course is a sequel to Macroeconomics I. In this course, the students are introduced to the
long run dynamic issues like growth and technical progress. It also provides the micro
foundations to the various aggregative concepts used in the previous course.
Course Outline
1. Economic Growth
Solow model; golden rule; technological progress and elements of endogenous growth.
2. Microeconomic Foundations
a. Consumption: Keynesian consumption function; Fisher’s theory of optimal
intertemporal choice; life-cycle and permanent income hypotheses; rational
expectations and random-walk of consumption expenditure.
b. Investment: determinants of business fixed investment; residential investment and
inventory investment.
c. Demand for money.
Readings
1. Dornbusch, Fischer and Startz, Macroeconomics, McGraw Hill, 11th edition, 2010.
2. N. Gregory Mankiw, Macroeconomics, Worth Publishers, 7th edition, 2010.
3. Olivier Blanchard, Macroeconomics, Pearson Education Inc., 5th edition, 2009.
4. Charles I. Jones, Introduction to Economic Growth, W.W. Norton & Company, 2ndedition,
2002.
5. Andrew B. Abel and Ben S. Bernanke, Macroeconomics, Pearson Education, Inc.,
7thedition, 2011.
6. Errol D’Souza, Macroeconomics, Pearson Education, 2008.
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ECON-DC 1: PAPER 10
3. Interest Rates
Determination; sources of interest rate differentials; theories of term structure of interest
rates; interest rates in India.
4. Banking System
a. Balance sheet and portfolio management.
b. Indian banking system: Changing role and structure; banking sector reforms.
Readings
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 11
INTRODUCTORY ECONOMETRICS
Course Description
Course Outline
6. Specification Analysis
Omission of a relevant variable, inclusion of irrelevant variable, tests of specification errors.
Readings
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 12
This course reviews major trends in economic indicators and policy debates in India, starting
from the pre-independence period and continuing to the present, and introduces students to
analytical methods appropriate for policy analysis.
4.Distributional Issues
Trends and policies in poverty; inequality; malnutrition and unemployment
Readings
1. Irfan Habib, Indian Economy: 1858-1914, 2006. A People’s History of India, Volume 28,
Tulika, Selected chapters.
2. Tirthankar Roy, The Economic History of India: 1857-1947, Oxford University Press, 3rd
edition, selected chapters, 2011.
3. Pulapre Balakrishnan, “The Recovery of India: Economic Growth in the Nehru Era,”
Economic and Political Weekly, November, 2007.
4. Jean Dreze and Amartya Sen, India: Development and Participation, Oxford University
Press, 2nd edition, selected chapters, 2002.
5. Rakesh Mohan, “Growth Record of Indian Economy: 1950-2008. The Story of Sustained
Savings and Investment,” Economic and Political Weekly, May, 2008.
6. Sumit Guha, “Mortality Decline in Early 20th Century India,” Indian Economic and
Social History Review, 1991.
7. Tim Dyson, “India’s Demographic Transition and its Consequences for Development,”
in Uma Kapila, (ed), Indian Economy since Independence, 19th edition, Academic
Foundation, 2008.
8. K.S James “Glorifying Malthus: Current Debate on Demographic Dividend in India,”
Economic and Political Weekly, June, 2008.
9. Rama Baru et al, “Inequities in Access to Health services in India: Caste, Class and
Region,” Economic and Political Weekly, September, 2010.
10. Geeta Gandhi Kingdon, “The Progress of School Education in India,” Oxford Review of
Economic Policy, 2007.
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11. Gaurav Datt and M. Ravallion, “Shining for the Poor Too?” Economic and Political
Weekly, February, 2010.
12. Ajit Mishra and Indranil Dasgupta, “Inequality” in Kaushik Basu and Annemie Maertens,
editors, The New Oxford Companion to Economics in India, Oxford University Press,
2012.
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ECON-DC I: PAPER 13
Readings
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 14
INTERNATIONAL ECONOMICS
Course Description
This course develops a systematic exposition of models that try to explain the composition,
direction, and consequences of international trade, and the determinants and effects of trade
policy. It then builds on the models of open economy macroeconomics. Although the course
is based on abstract theoretical models, students will also be exposed to real-world examples
and case studies.
Course Outline
1. Introduction
What is international economics about? An overview of world trade.
3. Trade Policy
Instruments of trade policy; political economy of trade policy; controversies in trade policy.
Readings
1. Paul Krugman, Maurice Obstfeld, and Marc Melitz, International Economics: Theory and
Policy, Addison-Wesley (Pearson Education Indian Edition), 9th edition, 2012.
2. Dominick Salvatore, International Economics: Trade and Finance, John Wiley
International Student Edition, 10th edition, 2011.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 15
This course examines sector-specific policies and their impact in shaping trends in key
economic indicators in India.
1.Macroeconomic policies
National Income, fiscal policy, trade and investment policy, financial and monetary policies,
labour policies
2.Agriculture
Agrarian structure and land relations; agricultural market and institutions; agricultural growth
and productivity; pricing and procurement
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 16
This is the second part of the economic development course. It begins with basic
demographic concepts and their evolution during the process of development. The structure
of markets and contracts is linked to the particular problems of enforcement experienced in
poor countries. The governance of communities and organizations is studied and this is then
linked to questions of sustainable growth. The course ends with reflections on the role of
globalization and increased international dependence on the process of development.
Course Outline
5. Globalization
Globalization in historical perspective; the economics and politics of multilateral agreements;
trade, production patterns and world inequality; financial instability in a globalized world.
Readings
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
6. Raghuram Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy,
Princeton University Press, 2010.
7. Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective
Action, Cambridge University Press, 1990.
8. Dani Rodrik, The Globalization Paradox: Why Global Markets, States and Democracy
Can’t Coexist, Oxford University Press, 2011.
9. Michael D. Bordo, Alan M. Taylor and Jeffrey G. Williamson (ed.), Globalization in
Historical Perspective, University of Chicago Press, 2003.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I-PAPER 17
RESEARCH-I
(Research Methodology: Applied Econometrics)
Course Description
The aim of this course is to provide a foundation in applied econometric analysis and develop
skills required for empirical research in economics.
Course Outline
1. Stages in Empirical Econometric Research
4. Advanced Topics
Panel data models; qualitative data
Readings
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 18
POLITICAL ECONOMY
Course Description
Employing perspectives from alternative schools of thought, this course explores the
development of the structure and institutions of capitalist economies and their relationship to
social and political forces. Students are expected to read some classic texts as well as more
recent commentaries.
Course Outline
4. Voting and Collective Action; positive and normative aspects of majority voting and
other common aggregation procedures; median voter theorem; positive and normative
implications of two-party and multi-party democracies; collective action; lobbying.
Readings:
11. R. Heilbroner, The Role of the State”, 1985. Ch.4 in The Nature and Logic of Capitalism.
12. M. Kalecki, “Political Aspects of Full Employment”, in E.K. Hunt and J.G. Schwarz
(eds.), A Critique of Economic Theory, Penguin Books, 1972.
13. Amit Bhaduri, “Nationalism and Economic Policy in the Era of Globalization”, 2002. Ch.
2 in Deepak Nayyar (ed.), Governing Globalization: Issues and Institutions, Oxford
University Press [also WIDER Working Paper no.188, WIDER website (2000)].
14. Prabhat Patnaik, “Introduction”, in Lenin and Imperialism, Orient Longman, 1986.
15. James O'Connor, "The Meaning of Economic Imperialism", in Robert Rhodes, ed.,
Imperialism and Underdevelopment, New York: Monthly Review Press, pp. 101 to 111,
1970.
16. S. Bowles, H. Gintis, “The evolutionary basis of collective action”, in B. Weingast, D.
Wittman (eds.), The Oxford Handbook of Political Economy, Oxford University Press,
2008.
17. A. Dixit, “The Making of Economic Policy: A Transaction Cost Politics Perspective,”
Munich Lectures in Economics Series, MIT Press, 1998.
18. A. Dixit, “Lawlessness and economics: alternative modes of governance” The Gorman
Lectures In Economics, Princeton University Press, 2004.
19. S. Djankov, E. Glaeser, R. La Porta, F. Lopez-de-Silanes, A. Shleifer, “The new
comparative economics”, Journal of Comparative Economics 31, 595-619, 2003.
20. A. Krueger, “The political economy of a rent-seeking society”, American Economic
Review LXIV, 291-303, 1974.
21. D. Mueller, “Public Choice III,” Cambridge University Press,2003, selections from
Chapter 5, 7, 11, 13.
22. K. Murphy, A. Shleifer, R. Vishny, “Why is rent-seeking so costly to growth?”, American
Economic Association Papers and Proceedings, 409-414, 1993.
23. M. Olson, “The Logic of Collective Action,” Harvard University Press, 1965.
24. R. Posner, “Theories of economic regulation”, Bell Journal of Economics 5, 335-358,
1974.
25. A. Shleifer, R. Vishny, “Pervasive shortages under socialism”, Rand Journal of
Economics 23, 237-246, 1992.
26. A. Shleifer, R. Vishny, “Corruption”, Quarterly Journal of Economics, 599-617, 1993.
27. G. Stigler, “The theory of economic regulation”, Bell Journal of Economics 2, 3-21,
1971.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I-PAPER 19
PUBLIC ECONOMICS
Course Description
Public economics is the study of government policy from the perspective of economic
efficiency and equity. The paper deals with the nature of government intervention and its
implication for allocation, distribution and stabilization. Micro theoretic tools are employed
to examine how rational individuals respond to incentives and how government policy may
be employed to enhance social welfare. Inherently, the course would involve a formal
analysis of government taxation and expenditure.
Course Outline
1. Competitive economies
Review of exchange and production economies, and classical efficiency theorems.
2. Public goods
Various modes of provision and decision-making; mechanism design, e.g., Clarke-Groves
schemes.Club goods and local public goods; various models of provisioning; the Tiebout
model.
3. Externalities
Various examples; various models for dealing with the inefficiency; taxation, licensing,
internalization, the Coasian approach.
4. Imperfect competition
Inefficiency and welfare loss; regulation of monopolies, monopsonies and oligopolies;
detection of collusion and merger policy; taxation as a remedy.
5. Asymmetric information
Moral hazard, screening, signalling; second-best contracting.
6. Taxation
Deadweight losses, optimal taxation, tax rules and equity considerations of commodity taxes;
public sector pricing; income taxes and labour supply; various taxation schemes; models of
tax evasion, auditing and punishment.
7. Fiscal federalism
Arguments for multi-level government; optimal structure; risk sharing.
Readings
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-DC I: PAPER 20
PROJECT
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
INTRODUCTORY ECONOMICS
Course Description
This course is designed to expose students to the basic principles of economics. The emphasis
will be on thinking like an economist and the course will illustrate how economic concepts
can be applied to analyse real-life situations.
Course Outline
Readings
1. N. Gregory Mankiw, Economics: Principles and Applications, India edition by South Western,
Cengage Learning India Private Limited, 4th edition, 2007.
2. Joseph E. Stiglitz and Carl E. Walsh, Economics, W.W. Norton & Company, Inc, New
York, International Student Edition, 4th edition, 2007.
3. Andrew B. Abel and Ben S. Bernanke, Macroeconomics, Pearson Education, Inc., 7th edition,
2011.
4. N. Gregory Mankiw, Macroeconomics, Worth Publishers, 7th edition, 2010.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
1. Dornbusch, Fischer and Startz, Macroeconomics, McGraw Hill, 11th edition, 2010.
2. N. Gregory Mankiw. Macroeconomics, Worth Publishers, 7th edition, 2010.
3 Olivier Blanchard, Macroeconomics, Pearson Education, Inc., 5th edition, 2009.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
1. F. S. Mishkin and S. G. Eakins, Financial Markets and Institutions, Pearson Education, 6th
edition, 2009.
2. F. J. Fabozzi, F. Modigliani, F. J. Jones, M. G. Ferri, Foundations of Financial Markets
and Institutions, Pearson Education, 3rd edition, 2009.
3. L. M. Bhole and J. Mahukud, Financial Institutions and Markets, Tata McGraw Hill, 5th
edition, 2011.
4. M. Y. Khan, Indian Financial System, Tata McGraw Hill, 7th edition, 2011.
5. Various latest issues of R.B.I. Bulletins, Annual Reports, Reports on Currency and
Finance and Reports of the Working Group, IMF Staff Papers.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
INDIAN ECONOMY
Course Description
This course introduces students to trends in major economic indicators and provides an
analysis of their economic impact.
Course Outline
I. Economic Development in Post-Independence India
Trends in sectoral growth, institutional framework and policy regimes
II. Growth and Distribution
Trends in poverty and inequality, measurement issues, social safety nets
III. Current Perspectives in Agriculture
Agricultural growth and composition, productivity, constraints, pricing
IV. Current Perspectives in Industry and Service
Changes in industrial growth and structure, labour; growth, productivity, public
sector, competition policy, foreign investment
Readings
1. Pulapre Balakrishnan, “The Recovery of India: Economic Growth in the Nehru Era,”
Economic and Political Weekly, November, 2007.
2. Jean Dreze and Amartya Sen, India: Development and Participation, 2nd edition, Oxford
University Press,2002, Selected chapters.
3. Rakesh Mohan, “Growth Record of Indian Economy: 1950-2008. The Story of Sustained
Savings and Investment,” Economic and Political Weekly, May, 2008.
4. Tendulkar Committee Report, summary, sections 2 and 3.
5. Ajit Mishra and Indranil Dasgupta, “Inequality” in Kaushik Basu and Annemie
Maertens, editors, The New Oxford Companion to Economics in India, Oxford
University Press, 2012.
6. Mahendra Dev, “Agriculture Development,” in Kaushik Basu and Annemie Maertens,
editors, The New Oxford Companion to Economics in India,op.cit.
7. Ramesh Chand, “Understanding the nature and causes of Food Inflation,” Economic and
Political Weekly, February, 2010.
8. Kunal Sen, “Trade, Foreign Direct Investment and Industrial Transformation in India,”
in Prem Chandra Athukorala, editor, The Rise of Asia, Routledge, 2010.
9. Isher Ahluwalia, “Industry,” in Kaushik Basu and Annemie Maertens, editors, The New
Oxford Companion to Economics in India, op. cit.
10. R. Nagaraj, “Industrial Growth,” in Kaushik Basu and Annemie Maertens, editors, The
New Oxford Companion to Economics in India, op.cit.
11. Rupa Chanda, “Services led Growth” in Kaushik Basu and Annemie Maertens, editors,
The New Oxford Companion to Economics in India, op.cit.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
DEVELOPMENT ECONOMICS
Course Description
This course reviews major policy debates in India in the post-Independence period, with
some focus on Indian agriculture and industry.
Course Outline
1. Issues in Growth, Development and Sustainability
Critical evaluation of growth, inequality, poverty and competitiveness, pre and post
reforms era;mobilisation of internal and external finance; monetary and fiscal policies;
centre-state financial relations.
3. Employment
Occupational structure in the organised and the unorganised sectors; open-, under- and
disguised unemployment (rural and urban); employment schemes and their impact.
1. Michael P Todaro and Stephen Smith. Economic Development, Pearson, 11th edition,
2011.
2. Uma Kapila, Indian Economy since Independence, Academic Foundation, 19th edition,
2009.
3. United Nations Development Programme, Human Development Report 2010, Palgrave
Macmillan, 2010.
4. Government of India, Economic Survey (latest)
5. Government of India, Five Year Plan (latest)
6. Government of India, Finance Commission Report (latest)
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-AC: PAPER 1
GAME THEORY
Course Description
Game theory is an integral part of modern economics and many other disciplines. Its basic
ideas and methods do not need any prior knowledge of economics. This course should be
accessible to anyone with an analytical mind and exposure to elementary mathematics. This
course introduces the basic concepts of game theory in a way that allows students to use them
in solving simple problems. The course will deal with the solution concepts for normal form
and extensive form games along with a variety of applications. The course trains the students
in business, political and social strategy formulations.
Course Outline
1. Normal form games
The normal form; dominant and dominated strategies; dominance solvability; mixed
strategies; Nash equilibrium; applications.
2. Extensive form games with perfect information
The game tree; strategies; subgame perfection; backward induction in finite games;
commitment; bargaining; other applications.
Readings
1. Martin J. Osborne, An Introduction to Game Theory, Oxford University Press, New Delhi,
2004.
2. Avinash Dixit and Susan Skeath, Games of Strategy, W. W. Norton & Company Inc., New
York,1999.
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-AC: PAPER 2
FINANCIAL ECONOMICS
Course Description
This course introduces students to the economics of finance. The course does not require any
prior knowledge of economics. This course should be accessible to anyone with an exposure
to elementary mathematics. The course is designed to impart the essential aspects of financial
asset valuation. The students will be introduced to numerical techniques in finance using
spreadsheet programmes such as Microsoft Excel. The course will impart skills that will be
useful in a variety of business settings including investment banks, asset management
companies and in the field of financial and business journalism.
Course Outline
1. 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.
2. 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.
3. Capital Asset Pricing Model (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.
Readings
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-AC: PAPER 3
PUBLIC FINANCE
Course Description
This course is a non-technical overview of government finances with special reference to
India. The course does not require any prior knowledge of economics. It will look into the
efficiency and equity aspects of taxation of the centre, states and the local governments and
the issues of fiscal federalism and decentralisation in India. The course will be useful for
students aiming towards careers in the government sector, policy analysis, business and
journalism.
Course Outline
Part 1: Theory
1. Overview of Fiscal Functions, Tools of Normative Analysis, Pareto Efficiency,
Equity and the Social Welfare.
2. Market Failure, Public Good and Externalities.
3. Elementary Theories of Product and Factor Taxation (Excess Burden and Incidence).
Readings
1. Musgrave, R.A. and P.B. Musgrave, Public Finance in Theory and Practice, Mc-Graw
Hill, 1989.
2. Mahesh Purohit , “Value Added Tax: Experience of India and Other Countries”, Gayatri
Publications, 2007.
3. Kaushik Basu, and A. Maertens (ed.), The Oxford Companion to Economics in India,
Oxford University Press,2007.
4. M.M Sury, Government Budgeting in India, Commonwealth Publishers, 1990.
5. Shankar Acharya, “Thirty years of tax reform” in India, Economic and Political Weekly,
May 2005.
6. Government of India, Report of the 13th Finance Commission.
7. Economic Survey, Government of India (latest).
8. State Finances: A Study of Budgets, Reserve Bank of India (latest).
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FOUR YEAR UNDERGRADUATE PROGRAMME: ECONOMICS
ECON-AC: PAPER 4
ENVIRONMENTAL ECONOMICS
Course Description
This course introduces students to concepts, methods and policy options in managing the
environment using tools of economic analysis. This course should be accessible to anyone
with an analytical mind and familiarity with basic concepts of economics. Since several
environmental problems are caused by economic activity (for instance, carbon emissions,
over-harvesting of renewable resources and air and water pollution as a by-product of
industrial activity), this course examines different approaches to adjusting behaviour through
economic institutions such as markets and incentives as well as through regulation, etc. It also
addresses the economic implications of environmental policies through practical applications
of methods for valuation of environmental goods and services and quantification of
environmental damages. Conversely, the impact of economic growth on the environment is
also addressed under the rubric of sustainable development. Environmental problems and
issues from the Indian and international context (especially global warming)are used to
illustrate the concepts and methods presented in the course. The course will be useful for
students aiming towards careers in the government sector, policy analysis, business,
journalism and international organisations.
Course Outline
1. Introduction
Key environmental issues and problems, economic way of thinking about these problems,
basic concepts from economics; Pareto optimality and market failure in the presence of
externalities; property rights and other approaches.
4. Sustainable Development
Concepts; measurement; perspectives from Indian experience
Readings
1. Roger Perman, Yue Ma, Michael Common, David Maddison and James McGilvray,
“Natural Resource and Environmental Economics”, Pearson Education/Addison
Wesley, 4th edition, 2011.
2. Charles Kolstad, “Intermediate Environmental Economics”, Oxford University Press, 2nd
edition, 2010.
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