Macroeconomics: Foundations and Insights

Welcome to the Macroeconomics course! This course is designed to provide you with a deep understanding of what an economy is, how it operates, and the factors that sustain and influence economic activity, including the role of policy interventions. You will explore macroeconomic policy analysis at the national level, essentially focusing on short-term macroeconomics, generally described as macroeconomic stabilization against growth or long-term macroeconomics. You will comprehend the theoretical frameworks through a contextualized treatment of concepts considering the experiences in the developing world and the global economy. You will get familiarized with the major macroeconomic debates. The course emphasizes intuitive learning of concepts with the help of diagrams, with only limited reliance on statistical or mathematical techniques.

• Introduction to Macroeconomics: Concepts and Terminologies
• This module introduces you to the basic macroeconomics concepts, macroeconomic indicators, and related terminologies. It defines an economy, its actors, and the notion of output gap. You will look at the circular flow of income, which highlights the importance of the system’s economic stability in sustaining economic activity and growth.
• Estimating Macroeconomic Indicators and National Income Accounting
• This module discusses the measurement of macroeconomic indicators and related issues. It is essential to track economic activity and provide evidence-based policy prescriptions when there are concerns about the stability and sustainability of the economy with consequences for the behavior of various economic agents. It elaborates conventions that guide the system of national income accounting. You will also discuss the use of GDP as an indicator of economic activity, its limitations, and its use in tracking human and social well-being.
• Aggregate Supply and Demand: Theory and Evidence
• This module discusses the conceptual or the theoretical underpinnings of aggregate supply and demand schedules. It elaborates on the Classical and Keynesian premises of macroeconomic analysis. This is followed up with an elaboration of empirical evidence for the aggregate supply schedule by visiting the Phillips curve and its modern interpretation involving the relationship between inflation and unemployment.
• Aggregate Demand
• The aggregate demand, the Keynesian contribution to macroeconomic analysis, is the main driver in the short-term stabilization of the economy. This module discusses the components of aggregate demand – consumption, investment, government spending, and net exports. By analyzing the demand for money and how the money market works, you will gain insights into developing an integrated treatment of the goods and the money market.
• Money, Interest Rate, and Income
• This module advances you to macroeconomic analysis by integrating the functioning of the money and the goods markets with the help of the IS-LM analytical tool kit. It goes on to elaborate the use of fiscal and monetary policy, identifying the application of specific policy instruments, for macroeconomic stabilization of an economy. It also discusses the institutional context of conducting fiscal and monetary policy.
• External Sector and Open-Economy Macroeconomics
• This module takes the final step in bringing macroeconomic analysis to the real-world context. It includes the external sector, thereby opening up the scope for capital flows, apart from trade in merchandise and services in the economy. You will look at the functioning of foreign exchange markets against the backdrop of flexible exchange rate regimes and some others. It goes on to highlight the efficacy of fiscal and monetary policy in the context of an open economy.
• Macroeconomic Policy Debates and Development Thinking
• This module highlights some important macroeconomic debates and their influence on the development thinking of the times. It traces how the role of the state and markets evolved in that context. It discusses the success stories of the 20th century and the countries that transited from the developing status to the developed ones. You will explore how that transition may have been helped using unorthodox or heterodox macroeconomic policy instead of the orthodox prescription pursued in this course. The module also describes the contours of a heterodox macroeconomic policy approach.