The Islamia University of Bahawalpur

Rahim Yar Khan Campus

Course Plan
DEPARTMENT OF ECONOMICS
Class: M.Sc. (Economics) Semester- 1st Session: 2018-20
Instructor Dr. Ishtiaq Ahmad Email: ishtiaq.ahmad@iub.edu.pk
Course Title Macroeconomics-I Program M.Sc. Economics

Course Objective:

This course is designed to provide graduate level understanding of macroeconomic concepts and models used in
economic and policy analysis. We will analyze the fundamentals of macroeconomic variables such as output,
inflation, and unemployment. In doing so, we will learn the tools, methods, and models that practicing
macroeconomists and researchers use to understand long-run growth, the business cycle, and the economic
policies of governments around the world. This course challenges you, the advanced student, conceptually and
quantitatively.
Macroeconomics is the study of economy as an integrated system, and this course will emphasize that idea by
constructing and analyzing economic models. The models will guide our investigations into central questions in
macroeconomics including the sources of economic growth, the causes of unemployment and inflation, and what
(if anything) policymakers can do to improve economic performance. As we develop the framework of
macroeconomic analysis, we will employ models presented by different school of thought on the basis of
historical perspective on the evolution of study of macroeconomics. It has also been tried to learn in this course
that how individual (and firm) decisions affect—and respond to —developments in the economy as a whole. The
course material will delve deeper into the core questions and focus on modeling. We will rely heavily on
mathematical methods in order to understand the frameworks at a rigorous level. As an economics course,
economic intuition remains centrally important..
Methods of Teaching
Assigned readings
Group activities & Discussion
Audiovisual aids lectures
Web-assisted instruction
Student-Directed Teaching
Reference Book Research Papers
i Richard T, Froyen. Macroeconomics: Theories and I Modigliani and Miller. 1958. “The Cost of
Corporation Finance and the Theory of
Polices, Prentice Hall; 10th Ed. (March 30, 2013). Investment”. The American Economic
Review, Vol.48, No.3, pp.261-297,
ii P. Aghion and P. Howitt (2009). The Economics of Ii Friedman, M. 1968. “The Role of Monetary
Policy”. The American Economic Review,
Growth, MIT Press, Cambridge, Massachusetts. Vol.
iii Wickens, Michael (2008). Macroeconomic Theory: Iii Lucas, R.E. 1973. “Some International
Evidence on Output-Inflation Trade Offs”.
A Dynamic General Equilibrium Approach, The American Economic Review, Vol. 63,
Princeton University Press, 1st ed. No. 3, pp.326-334.

iv Helpman, E., The Mystery of Economic Growth, Iv Deaton, A; and Muellbauer, J. 1980. “An
Almost Ideal Demand System”. The
Harvard University Press American Economic Review, Vol. 70, No.3,
pp.312-326.
v Romer, David, “Advanced Macroeconomics”, V
McGraw Hill, 1st Edition, 1996
Web Resources

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 i http://courses.essex.ac.uk/ec/ec994/
ii http://www.gams.com/solvers/mpsge/index.htm,
iii http://home.datacomm.ch/paulsoderlind/Courses/OldCourses/MonAll.pdf,
iv http://www.economicsnetwork.ac.uk/teaching/Online%20Text%20and%20Notes/Advanced%20M
acroeconomics
V http://dspace.mit.edu/handle/1721.1/34896
Grading Exam (Date to be announced) , Mid- Exam (30%) Final Exam (50%), Problem Session/Assignments (20%)
Problem Preferably in class
Session
Student Evaluation criteria:
Attendance 5%
Workshop / Assignments/Case study 5%
Surprise Test/Sudden Test , Quizzes 5%
Class Participation 5%
Mid Term Paper 30%
Final Term paper 50%
Total 100%
SEQUENCE OF TOPICS TO BE COVERED
Lectur Session # Topics (outline of main topics and sub topics) Tutorial
e Date /Laboratory
What is macroeconomics? Output, Unemployment, Inflation,
WEEK 1 1 Oct to 5 Oct Federal Budget and Trade Deficit.Central Questions in Tutorial
macroeconomics: Output instability, movement in inflation rate,.
output-inflation relationship, growth slowdown and turnaround, Tutorial
implications of deficit and surpluses, National Income Accounts
WEEK 2 8 Oct to 12 Oct
Gross Domestic Product National Income, Personal and
Disposable Personal Income.
Some National Income Accounting Identities, Measuring Price
WEEK 3 15 Oct to 19 Oct Changes: Real v/s Nominal, The Consumer Price Index and
Producer Price Index, Measuring Cyclic variation in output.
Mercantilist school of though and Classical Revolution, Finding Tutorial
Output and Employment under Classical Case, Equilibrium level
WEEK 4 22 Oct to 26 Oct
of output and employment described by Classical School of
thought.
The Quantity Theory of Money: Equation of Exchange, Tutorial
WEEK 5 29 Oct to 2 Nov Cambridge Approach and Classical Aggregate Demand Curve,
Classical Theory of the Interest Rate.
Policy Implications of Classical Equilibrium Model: Fiscal and Tutorial
WEEK 6 5 Nov to 9 Nov Monetary Policy. Keynesian Perspective: The Problem of
unemployment, Simple Keynesian Model:
Conditions for Equilibrium Output, The Components of Tutorial
WEEK 7 12 Nov to 16 Nov Aggregate Demand: Consumption, Investment, Government
Spending and Taxes, Determining Equilibrium Income.
WEEK 8 19 Nov to 23 Nov Mid Term Examination Tutorial
Changes in Equilibrium Income, Fiscal Stabilization Policy, Tutorial
WEEK 09 26 Nov to 30 Nov Export and Import in Simple Keynesian Model, Money in the
Keynesian System: Interest Rate and Aggregated Demand.
Keynesian Theory of Money Demand, Effects of Increase in the
WEEK 10 3 Dec to 7 Dec Money Supply, The IS-LM Model: Money Market Equilibrium- Tutorial
The LM Schedule, Product Market Equilibrium.
The IS Schedule, The IS-LM Schedules combined, Factors that
WEEK 11 10 Dec to 14 Dec affect Equilibrium Income and the Interest Rate: Monetary
Influences and Real Influences, Fiscal and Monetary Policy
Effectiveness and Slope of IS Schedule, Fiscal and Monetary Tutorial
WEEK 12 17 Dec to 21 Dec Policy Effectiveness and Slope of LM Schedule, Surprise Quiz,
Keynesian Aggregate Demand Curve.
Keynesian Aggregate Demand with Classical Aggregate Supply,
WEEK 13 24 Dec to 28 Dec Contractual View of the Labor Market: Sources of wage rigidity,
Flexible Price-Fixed Wage Model.
WEEK 14 31 Dec to 4 Jan Labor Supply and Variability in the Money Wage, Effects of Tutorial
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 Shits in Aggregate Supply Schedule, Monetarist Proposition,
Friedman’s Restatement of Quantity Theory of Money:
Fiscal and Monetary Policy, Unstable Velocity and the Declining Tutorial
WEEK 15 7 Jan to 11 Jan Policy Influence of Monetarism, Recent Instability in the Money-
Income Relationship
The New Classical Position: A broad view, The Keynesian Tutorial
WEEK 16 14 Jan to 18 Jan Counter-critique, Real Business Cycle Model, New Keynesian
Economics, Natural Rate Theory.

21 Jan to 25 Jan Final Term Examination

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