An Brief Economic History of India

Chanakya/Kautilya Arthshastra dealt with all aspects of the life of a ruler Mohenjodaro/Harrapa !atliputra "aketa were alon# the lar#est cities of their time India the #olden $ird of a#es #one $y %&! and %rowth the Bu'' (ord these days) A study $y An#us Maddison

!reliminaries) "cientific Methodolo#y

*$ser+e and identify phenomenon to $e e,plained -ormulate an e,planation) An economic theory &e+elop a model to formalise the theory Collect and analyse real world data .est of the economic theory or model

Models *ccam/s 0a'or and ceteris paribus

Economic Models are toys just as a model aeroplane is a toy1 Models incorporate only features of the real world considered essential $y the modeller for the purpose for which model is to $e used1 *ccam/s 0a'or) 2&o not multiply entities3) "imple is $etter1 Ceteris paribus or 2*ther thin#s e4ual3 2holdin# other thin#s e4ual5 is an a$straction 66 so that chan#es due to the factor $ein# studied may $e e,amined independently of other factors1 By playin# with the model one #ains an understandin# of how the model works1 A #ood model also allows correct conclusions a$out how real world $eha+iour of the system $ein# modelled responds to important e,ternal stimuli

!reliminaries) Methodolo#y

.ime frame is an important determinant of how a model represents the world) "tatic model sin#le point in time &ynamic model focus on se4uence of actions and payments

(hat is Economics7
Epistemolo#y ) -rom Aristotle All Buyin# and "ellin# Acti+ities into two sorts) *economia housekeepin# or the maintenance of a well run state Chrematistike makin# of money for its own sake Many Economists $elie+e that Chrematistics would $e a $etter name

(hat is Economics7
Economics is the study of how people choose to use resources 0esources include) time and talent people ha+e a+aila$le land $uildin#s e4uipment and other tools knowled#e of how to com$ine them to create useful products and ser+ices (hy the o$session with money7 As money can $e translated into almost any other resource its metric $y which all resources are measured

(hat is Economics7
!ositi+e economics is the study of how people and societies make use of scarce resources to meet their needs 8ormati+e economics is the study of how people and societies "H*9:& make use of scarce resources to $est meet their needs In the process economics deals with a +ast +ariety of su$ject matter) -inancial Matters !o+erty Alle+iation .errorism/"ports/E+en !irates

(hat is Economics7
In short economics includes the study of la$or land and in+estments of money income and production and of ta,es and #o+ernment e,penditures Economists seek to measure well6$ein# to learn how well6$ein# may increase o+er time and to e+aluate the well6$ein# of the rich and the poor

.he .hree Basic ;uestions

(hat to produce/consume7 How to produce/consume7 How much to produce/consume7

:e+els of A##re#ation
.hese 4uestions can $e asked and answered at +arious of a##re#ation But the le+el of a##re#ation alters the related analysis Hence economic analysis is carried out at two distinct le+els) Micro Indi+idual &ecision Makin# 9nits a##re#ation if any stem from a simple summation of its parts1 E,amples7 Macro "ociety/8ation le+el a##re#ation1 E,amples7 Both try to e+aluate answers to the $asic 4uestions at the rele+ant le+el of a##re#ation