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MACROECONOMIC THEORY

Course Outline
MS ECONOMICS/ BS EM 6/ MS 1
Spring, 2017

Instructor: Dr. Qazi Masood Ahmed

Section 1 : Re-visiting nuts and bolts of Macroeconomics (3 Lectures)

School of Thoughts in Macroeconomics
Issues in Pakistan National Income Accounts
Ingredients of Keynesian Theory of Employment
Introduction to IS-LM framework

Section 2 : Macroeconomic Framework (Lectures 10)

Equilibrium in Labor Market (Ch 2 AB)
Production Function
Determinants of Labor Demand
Determinants of Labor Supply
Derivation of FE curve

Long-Run Economic Growth (Ch 5 AB)
Sources of Economic Growth
Growth Accounting
Fundamental Determinants of Growth and Welfare in Pakistan

Equilibrium in Commodity Market (Ch 3 AB, Ch 10 DFS)
Consumption Function and Multiplier
Derivation of IS curve
Implications of Slope of the IS curve

Equilibrium in Money Market (Ch 6 AB, Ch 10 DFS)
Equilibrium in money market
Derivation of LM curve
Implications of Slope of the LM curve

General Equilibrium in complete aggregate demand and Supply (Ch 8 AB,
Ch 10 DFS)
Aggregate supply framework.
Determinants of Aggregate supply curve
Aggregate demand framework.
Determinants of Aggregate demand curve
Equilibrium in Aggregate demand Aggregate supply.
Derivation of AD curve
Implications of Slope of the AD

4 : Macroeconomic Policies in IS .LM Framework (Lectures 4) Growth Business cycle Unemployment Inflation Philips Curve .LM Framework (Lectures 6) Demand for money Theory of Demand for money Further Aspects of Demand of Money Behavior Money Supply Dynamics Principles of Money Supply Determination Money Multiplier Targets of the Monetary Policy Rules vs Discretion in conducting Monetary Policy Stabilization of the economy through Monetary Policy Ingredient of Fiscal Policy Fiscal Policy in Practice Stabilization of the economy through Fiscal Policy Section 5 : Macroeconomic Issues IS .Section 3 : Behavioral Foundation of macroeconomics (Lectures 4) SAVING AND CONSUMPTION Determinants of Saving Multi Period Saving Decisions Classical Consumption Models The Life-Cycle/Permanent-Income Hypothesis BUSINESS INVESTMENT Accelerator Theory Neoclassical Investment Models Investment and the Cost of Capital Jorgenson Model The Q-Theory of Investment (Tobin’s q) Tobin’s q and Aggregate Investment Section .

pk Grading Plan: 1. A. Q. (1950). Fisher and Stratz. H. (2003). Gregory Mankiw (GM) 7th Edition 4. In A Theory of the Consumption Function (pp. M. 1 (15. No.. A. Term Examination(15+15) 30 2. 9. Hall. 107-128.. A. Determinants of Total Factor Productivity in Pakistan.) Abel and Bernanke (AB) 2. K. E. Working Papers/Research Report 66. Khan. Viva Exams (10+10) 20 3. The Pakistan Development Review. Macro Economics (DFS) 11th Edition. 391-414. Lahore Journal of Economics. M.pide.org. Q. Hyder. www. Pakistan Economics Surveys. Social Policy and Development Center. D.org. The demand for money in Pakistan: Some further results. Determinants of recent inflation in Pakistan.pk 6. Class Participation 10 2. Princeton University Press. 3 (June). Vol. 115-156). 25-50. (1980). American Economic Review. Khan. 57. A Theory of Income Determination.pk 7.spdc. Consistency of the Permanent Income Hypothesis with Existing Evidence on the Relation between Consumption and Income: Time Series Data.org. Final Exam 40 Initial List of Papers to be discussed in the class Ahmed. R. (2007). The Journal of Political Economy. Dornbush. M. Working Papers/Research Report 68.. Ahmed. M. Tax Policy and Investment behavior. & Jorgenson. www.aerc. & Hyder. . Annual Issues.. No. Macroeconomics by N. 3.Books Material/ Suggested websites: 1 Macroeconomic (8th Ed. & Hyder. H. K. (1957). June 2004): pp. www. 523- 541. Q. 5. Social Policy and Development Center. K. & Ahmed.. Friedman. Why private investment in Pakistan has collapsed and how it can be restored. (2007). M. (1967). Somers. W.

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& Ahmed. M. & Jorgenson.References (from Developing Economies specially Pakistan Economy) Section 2 1) Qazi Masood Ahmed and Kalim Hyder (2007). Research Report No 68. M. K. Tax policy and investment behavior: The American Economic Review.. A. 115-156). Princeton University Press. (1963). Social Policy and Development Centre. 523-541. A. A. www. H. (2007). M. M. & Hyder. 4) Hall. R. (1980). 25-50. E. Why private investment in Pakistan has collapsed and how it can be restored. Determinants of recent inflation in Pakistan.. 7) Khan. 5) Hyder. Q. (1957). 9) . H. (2003).. A Theory of Income Determination. “Stability of money demand function in Pakistan”. 6) Khan. “Determinants of Total Factor Productivity in Pakistan”. Consistency of the Permanent Income Hypothesis with Existing Evidence on the Relation between Consumption and Income: Time Series Data. The Journal of Political Economy. Q. (1950). In A Theory of the Consumption Function (pp. K. W. D.pk 2) Muhammad Omer (2009). Ahmed.spdc@org.. Munich Personal RePEc Archive 3) Friedman. 8) Somers. The demand for money in Pakistan: Some further results. The Pakistan Development Review.