Department of Management Sciences
Preparing students to think like never before
To deliver world class – par excellence, management education by focusing and strengthening the skills and knowledge base and refining attitudes of the future business and industry leaders.
Scheme of Study
DETAILS OF COURSES FOR BS (ECONOMICS)
First Semester
Subject: Fundamentals of Economics
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
This course introduces the fundamental concepts and terminologies of Economics. This first subject in economics emphasizes on actions of an individual when he/she acts as consumer and producer under different circumstances. Description of the major concepts of a Market Forces. To make students able to think: how changes in demand and supply forces affect a market. The students, to some extent, will be able to understand different market fluctuation happening in out real life. It will also help out the students how market for different goods act differently.
Course Outline:
Note: The topics will be taught with special reference to their Economic relevance.
1. Nature, scope and importance of Economics, Scope of economics classical, neo classical, and London school of economics view regarding economics. Microeconomics vs. Macroeconomics, Scarcity and choice, Opportunity cost, Factors of Production, Production possibility frontier, Basic economic problems of an economy.
2 Demand analysis: Law of demand, determinants of demand, movements verses shift in demand curves, composite demand, joint demand, market demand, Concepts of Perfect substitutes and perfect complements
3 Supply: Law of supply, determinants of supply, movements verses shift in curves, composite supply, joint supply, market supply, supply equation, Market equilibrium: Theoretical, diagrammatical
4 Concept of elasticity, Price elasticity of demand, Income elasticity of demand, Cross Elasticity of Demand, Price elasticity of supply, Application of elasticity.
5. Market equilibrium: Theoretical, diagrammatical and mathematical explanation of market equilibrium. Dynamic changes in market equilibrium.(relative changes in demand supply and its effect on market equilibrium)
6. Consumer behavior, Preferences, Utility function, Laws of Diminishing marginal utility, Law of Equi-marginal utility.
7. Factors of production and their rewards, Total, average, and marginal products, Laws of returns, Cost of production,
8. Total, average and marginal costs, Total average and marginal revenue. Concept of profit maximization / Cost minimization.
9. Market Structure: Perfect competition: The Perfectly competitive market:
The assumptions of the Model: Short run equilibrium of the price taker firm: Long run equilibrium of the price taker firm
10 Imperfect competition: Monopoly, Monopolistic Competition, Output and price determination under monopoly. Output and price determination under monopolistic competition, assumption of monopolistic competition
11 Concepts of national income, GDP & GNP, Real vs. nominal GNP, NNP,NI, PDY, Saving and Personal Consumption
12 Concept of inflation, unemployment, Balance of payment, Exchange rate and Business cycles.
13. Monetary Policy and Fiscal Policy and their role in the economy.
Reference Books / Literature:
1. Michel Parkin. 2004. Economics, 5th Ed., Addison Wesley.
2. Paul A. Samualson and W.D. Nordhaus. 2004. Economics, 18th Ed., McGraw Hills,
Inc.
3. John Sloman, Economics (Latest Edition).
4. Miller. Microeconomic Theory (Latest Edition).
5. Lipsey and Crystal. Economics (Latest Edition).
6. Robert S Pindyck & Daniel L. Rubinfeld, Microeconomics.
Subject: ECO-100 – Mathematics for Economists-I
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
The course will enable the students to understand the basics of Mathematics and its application to Economics. This course will also enable the new comers to apply mathematical tools in economic concepts.
Course Outline:
1. Introduction to Mathematics for Economics, Arithmetic Operations, Fractions, Ratio
Proportion
2. Solving Linear Equations and Inequalities, Calculating Percentages Quadratic Equations and their solutions
3. Simultaneous Equations in Economics, Elasticity of Demand and Supply
4. Application of Quadratic equations in Economics Graphs, Variables and Types of
Variables used in Economics
5. Functions and Types of Functions. Partial Fraction
6. Sequence and Series Limits and Continuity
7. Matrices.Determinants
8 Straight Line and its types
9. Linear Programming Logarithmic and Exponential Functions
Text Book / Essential Reading:
- Soper, J, Mathematics for Economics and Business, Second Edition, Black Well Publishing
- Chiang, A, Fundamental Methods of Mathematical Economics, 4th ed., Mc-Graw Hill-Irwin
- Bradley, Teresa, Essential Mathematics for Economics and Business, 2nd ed. Wiley India Pvt. Ltd.
Second Semester
Subject: Principles of Microeconomics
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
This unit is designed to equip students with the economic principles which are necessary to analyse a whole range of economic problems. It builds on the foundations of economic analysis provided in fundamentals of economics. To introduce students to an understanding of the domain of economics as a social theory. Description of the major concepts of a Market Forces. To make students able to think: how changes in demand and supply forces affect a market. The students, to some extent, will be able to understand different market fluctuation happening in out real life. It will also help out the students how market for different goods act differently. In this course, students will learn to apply an analytical approach to the study of how individuals and societies deal with the fundamental problem of scarce resources. This approach is applied to everyday decisions faced by individuals as they try to maximize their utility, to businesses that try to maximize profits and to the whole of society as it attempts to use its resources efficiently.
Course Outline:
1. Introduction: Overview of microeconomics, Consumer, firm, and market, Laws of demand and supply, Market equilibrium, Shifts in demand and supply curves, and market equilibrium. Price elasticity of demand, Income elasticity of demand, Price elasticity of supply and Application of elasticity.
2. Consumer Behavior: Consumer’s problem, Utility theory, Laws of diminishing marginal utility and equi-marginal utilities, Indifference curves, Budget constraint.
3. Theory of Firm: Cost and Returns: Law of diminishing returns, Increasing, decreasing and constant returns to scale, Forms of business organization.
4. Production Function: Production function. Revenue function, Cost function, Profit maximization, Cost minimization. Demand function for factors of production, Supply function of output. Short-run and long-run cost function
5. Market Structure: Market Structure: Perfect competition: The Perfectly competitive market:The assumptions of the Model: Short run equilibrium of the price taker firm: Long run equilibrium of the price taker firm: Equilibrium of the industry: Difference between Perfect and Pure Competition; Price and Output Decision.
6. Factor Pricing and Productivity Introduction of factor pricing. Marginal productivity theory.
7. General Equilibrium and Welfare Economics General Equilibrium and welfare, edge worth box diagram, Preto-optimility etc.
Books Recommended
1. Gragory Mankiv. 2001. Principles of Economics. Dryden Press.
2. Samulson and Nordrons. 2004. Economics. McGraw Hill. Inc.
3. McConnel and Bruce, Principles of Economics. Latest edition.
4. Lipsey and Goerant, Principles of Economics. Latest edition.
Subject: ECO-100 – Mathematics for Economists-II
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
The course will enable the students to understand the basics of Mathematics and its application to Economics. This course will also enable the new comers to apply mathematical tools in economic concepts
Course Outlines:
- Economic Applications of Graphs and Equations, Iso-cost lines, Income determination model, IS-LM analysis
2. Simultaneous Equations in Economics, Elasticity of Demand and Supply, Equilibrium and Break Even Analysis. Intersection of MC and MR or AVC
3. Derivative and rules of Differentiation
4. Applications of Differentiation: Marginal Revenue, Average Revenue, Marginal Cost, Average Cost, Point Elasticity of Demand and Supply Curve
5. Higher Order Derivatives. Partial Differentiation
6. Integration, Rules of Integration. Differentiation of logarithmic and Exponential
Functions ,Product rule, Quotient rule and Chain rule
7. Definite integral, Differential Equations
8. Applications of Determinants in Economics
Text Books / Essential Reading:
- Soper, J, Mathematics for Economics and Business, Second Edition, Black Well Publishing
- Chiang, A, Fundamental Methods of Mathematical Economics, 4th ed., Mc-Graw Hill-Irwin
- Bradley, Teresa, Essential Mathematics for Economics and Business, 2nd ed. Wiley India Pvt. Ltd.
Third Semester
Subject: Principles of Macroeconomics
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
To review the fundamental concepts necessary for studying business decision-making. To provide students with the analytical tools necessary to understand the objectives of firms and their pricing, entry and exit, investment, financing and multi market strategies.The ultimate objective of the course is to provides students with the tools to use economic principles in decision-making and an understanding of the broader economic environment in which business decisions must be made.
Course Outlines:
1. Introduction Definition of macroeconomics, Brief account of the development of macroeconomics after the World War-II, Concept of business cycles: Boom and Depression, Concepts of Inflation and Unemployment, Macroeconomic variables and their mutual relationship, real and nominal variables.
2. National Income: Definition and concept of national income, Measures of national income: Gross Domestic Product (GDP) and Gross National Product (GNP), GDP at factor cost and at market prices, concept of depreciation and NNP, Personal Income and Disposable Income etc., Different methods of computation of national income: Product, Income and Expenditure approaches, Circular flow of income, Real versus Nominal income, GNP deflator, Per capita income and standard of living, Study of Pakistan Economic Survey (latest).
3. Components of Aggregate Demand: The concept of models as abstract representation of the real economy, closed and open economy models, Concept of aggregate markets: Product, Money, Labor and Capital markets, Components of aggregate demand: Consumption, Saving and Investment (to be explained with simple linear functions), Government expenditure.
4. Determination of National Income: The Keynesian model for a simple two-sector economy, injections into and leakages from the economy, inflationary and deflationary gaps, Equilibrium of aggregate demand and supply: the concept of multiplier and accelerator, concepts of full-employment and under employment.
5. Money and Banking: Definition, forms, functions of money, Central Bank and its functions, the role of State Bank of Pakistan, Commercial banking, Demand for money: the Quantity Theory of money, Inflation: measurement and impacts, causes of inflation and remedies, Monetary policy: brief introduction.
6. Public Finance: Sources of public revenue and various forms of taxes, Major heads of public expenditure, Concept of budget deficits and sources of filling the gaps, deficit financing, study of the Federal budget of Pakistan (latest) and Provincial/ Local government budgets (relevant areas). Fiscal policy: meaning and objectives.
7. International Trade: Concept of imports and exports, Theory of absolute and comparative advantage, custom duties, Currency exchange rates, and Balance of Payments: causes of deficits in BOP of Pakistan and remedial measures, the problem of external debt.
Books Recommended:
1. Mankiw, Gregory – Principles of Economics, 2nd Edition, South-West
Publishers (2001).
2. Parkin, Michael - Macroeconomics, 7th Edition, Prentice Hall (2004).
3. Miller, R.L. – Economics Today: The Macro View, Addison Wesley
(2005).
4. Pakistan Economic Survey (current issue), Economic Advisor Wing,
M/o Finance, Govt. of Pakistan.
Subject: Mathematical Economics III
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
The course is divided into two parts. Part one of the course will attempt to familiarize students with the basics of matrix algebra, and the basic tools of optimization. Optimization technique is used frequently to solve for equilibrium in microeconomic models used in mainstream neoclassical economics. The students need to, before they embark on the study of these models, understand techniques related to finding derivatives and differentials, and they need to understand how optimization, under different conditions and with a variety of functions, works. These tools will facilitate our understanding of comparative statistics and optimization, as used in models of microeconomics, and related fields like industrial organization and development. These models form the backbone of intermediate level micro, and other applied micro fields.
Course Outlines:
1. The Nature of Mathematical Economics: Ingredients of mathematical models.
Derivations: Equation of a straight line and its forms: Two point, intercept, point slope
and slop intercept. Types of functions: constant, polynomial, rational, non-algebraic.
Relationships and functions. Indices & their rules. Functions of more than two
independent variables. Logarithms & the rules of logarithms.
2. Equilibrium Analysis in Economics: A linear partial equilibrium market model.
The effect of an excise tax in a competitive market. Non linear market model. General
Market Equilibrium. Equilibrium in a linear National Income Model.
3. Linear Models and Matrix Algebra: Theory of matrix multiplication. Laws of
matrix operations. Types of matrices: Square, identity, null, idempotent, diagonal,
transpose and their properties. Conditions for non singularity of a matrix. Minors and
cofactors. Determinant & its properties. Solution of linear equations through Gaussian
method, Cramer’s rule and Inverse of a matrix method. Properties of inverse of a
matrix. Use of matrix approach in market & national income models.
4. Differentiation: Rules of differentiation. Differentiation of a function of one variable.
Sumdifference, product, quotient, chain, power, inverse, logarithmic & exponential functions Combinations of rules. Higher order derivatives. Economic applications of derivative. Concept of maxima & minima, elasticity and point of inflection. Profit & revenue maximization under perfect competition, under monopoly. Maximizing excise tax revenue in monopolistic competitive market, Minimization of cost etc.
5. Partial & Total Differentiation: Partial differentiation & its rules. Higher order &
cross partial derivatives (young’s theorem). Total differential & total derivatives.
Implicit functions rule of differentiation. Optimizing cubic functions & their economic
application.
6. Economic Applications of Partial & Total Differentiation: Comparative static
analysis: a linear Partial equilibrium market model, a linear National Income model.
Partial elasticities. Production functions Analysis. Maximization & Minimization of
unconstrained functions & their economic applications: Profit maximization by a
multi-product firm under perfect Competition & monopoly, Price discrimination,
Multi-plant monopoly, input decisions etc.
7. Optimization: Constrained & Extrema: Free and constrained optimization, extrema
of a function of two variables: graphical analysis, Lagrange method. Utility
maximization & Cost minimization. Homogenous Production function, Cobb Douglas
Production function. Jaccobian determinants. CES Production Function. Translog
Function.
8. Linear Programming: Ingredients of linear Programming. Graphical approach, simplex method, economic application of linear programming. Concept of primal & dual. Duality theorems. Solving of Primal via dual. Economic interpretation of a dual.
Recommended Book:
1. Chiang, A. C., Fundamental Methods of Mathematical Economics, McGraw Hills, (Latest Edition).
2. Baumol W. J., Economic Dynamics, Macmillan, (Latest edition).
3. Budnick, Frank, Applied Mathematics for Business, Economics and Social Sciences.
4. Dowling E. T., Mathematics for economists, Schun Series (latest edition).
5. Weber E. Jean, Mathematical Analysis, Business and Economic
Applications (Latest Edition) Harper and Row Publishers, New York.
Fourth Semester
Subject: Intermediate Microeconomics
Total Credit Hours: 3 Lectures Credit Hours:3
Lab. Credit Hours: 0
Course Objectives:
This course provides an introduction to the theory and practice of contemporary concepts and terminologies of microeconomics. The primary focus of this course is on how individuals and societies deal with the fundamental economic problem of scarcity. The course begins with a discussion of several basic tools and concepts including: demand, supply, elasticity. Each of these introductory concepts is used to help illuminate the discussion of contemporary policy issues (e.g., the minimum wage, farm subsidies and tax etc.). The role of government in correcting for alternative types of market failure is also examined.
The course provides a more detailed discussion of the theory of consumer demand. In this course students examine the determinants of consumer and producer surplus. In particular, students examine how the price and income change effect the consumer equilibrium.
The course provides a discussion of the determination of equilibrium levels of wages, rental rates, interest rates, and profits under alternative market structures. Particular focus is placed on the labor market and alternative sources of wage differentials among individuals. It will also build student understanding toward return under risk and uncertainty.
Course Outlines:
1. Demand and Law of demand, determinants of demand, movements verses shift in demand curves. Supply and Law of supply, determinants of supply, movement verses shifts in supply curves. Market equilibrium and effects of change in demand and supply on market demand.
2. Effect of govt. intervention: price ceiling and price flooring. Price elasticity of demand and supply, types of elasticity of demand and supply, methods of measurement of elasticity of demand and supply. Demand and supply elasticity over time. Effect of tax on equilibrium quantity and price. Role of demand and supply elasticity in incidence of tax. Income and cross price elasticity.
3. Consumer preferences and properties of consumer preferences. Utility and utility function along with concept of ordinal preferences. Budget constraint and effect of change in price and income on budget constraint. Consumer equilibrium. Derivation of demand curve with different methods. Engle curve. Effect of price change in case of normal, inferior and giffen good case.
4. Cost of living adjustments. Inflation index. Effects of inflation adjustments. Deriving labor supply curves and Labour leisure choice. Income and substitution effect and shape of Labour supply curve. Income tax rates and Labour supply.
5. Production function. Short run production: one variable and one fixed input. Law of diminishing marginal product. Total, average and marginal product. Long run production: two variable inputs isoquants.
6. Return to scale and productivity and technical change. Short run and long run cost and expansion paths. Cost of producing multiple goods. Perfect competition and profit maximization under it.
7. Competition in short run and long run. Zero profit for competitive in long run. Measuring consumer surplus using demand curve and effect of price change on consumer surplus. Producer surplus and its measurement using supply curve.
8. Effect of shift in supply and demand on welfare. Polices that create wedge between supply and demand. Welfare effects of sales tax & price floor. Comparing both types of polices: imports Free trade vs. ban on imports. Free trade vs. a tariff .Free trade vs. quota
9. General equilibrium. Trading between two peoples Endowments Mutually beneficial trade and competitive exchange. Production and trading. Efficiency and equity.
10. Monopoly: market power and shape of demand curve. Effect of shift in demand curve. Welfare effect of monopoly. Cost advantages that create monopolies and natural monopoly. Govt. actions that create monopoly and govt. actions that reduce market power.
11. Oligopoly and monopolistic competition. Game theory: A single period two firm quantity setting game. Why firms do not cooperate in a single period game. Collusion in repeated games. Cooperative oligopoly models. Why cartels form and why a cartel fails. Mergers. Cournot model of noncooperative oligopoly. Stackelberg model of noncooperative behavior.
12. Perfect price discrimination. Quantity discrimination. Multimarket price discrimination. A two-part tariff. Factor markets and vertical integration. Short run and long run demand of a firm under competitive factor market. Effect of monopolies on factor market.
Recommended Book:
1. Chiang, A. C., Fundamental Methods of Mathematical Economics, McGraw Hills, (Latest Edition).
2. Baumol W. J., Economic Dynamics, Macmillan, (Latest edition).
3. Budnick, Frank, Applied Mathematics for Business, Economics and Social Sciences.
4. Dowling E. T., Mathematics for economists, Schun Series (latest edition).
5. Weber E. Jean, Mathematical Analysis, Business and Economic
Applications (Latest Edition) Harper and Row Publishers, New York.
Subject: Economy of Pakistan
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
To provide students with the analytical tools necessary to understand the problems of macro-economic issues, poverty, growth, unemployment, budget deficit, economic policies, international trade etc.The ultimate objective of the course is to provide students with the tools to use economic principles in decision-making and an understanding of the broader economic environment in which our economy is remain challenge for other countries i.e. geographical importance of Pakistan.
Course Outlines:
1. Concept of Economic Development :Economic Development vs. economic Growth, Trickle down effect. Characteristics of developing countries. Methods to measure economic development: Human Development Index, the importance of saving, investment and technological progress in economic development, the state of Pakistan economy viz-a-viz developed economies.
2. Factors of Economic Development: Role of natural, human, capital resources and infrastructure in economic development, Role of social factors: health, education and training in accelerating economic growth.
3. Role of Strategic Sectors: Importance and problems of agriculture, industry, human capital, transport and communications sectors, the role of public policies in solving problem of inflation and unemployment.
4. Banking Sector in Pakistan: Role of commercial and central banks in resource mobilization, growth of banking sector, nationalization and privatization of banks, role of monetary policy in promoting economic growth, Inflation in Pakistan: causes and remedies, Islamic banking in the Pakistan: issues and prospects.
5. Fiscal System in Pakistan: Public revenues and expenditure, budget formulation and fiscal policy, Management of public debt in Pakistan.
6. Foreign Trade: Role of foreign trade in economic growth, Export-promotion and Import substitution policies, terms of trade, BOP problems, role of remittances and foreign assistance in Economic Development of Pakistan.
Books Recommended:
1. Kh. Amjad Saeed, (latest), ”The Economy of Pakistan”. S.A. Salman Publications.19
2. Vaqar Ahmad & Rashid Amjad, The Management of Pakistan’s Economy. Oxford
University Press, Karachi.
3. Pakistan Economic Surveys, Published by Government of Pakistan. (Latest issues).
4. Latest Annual Report of State Bank of Pakistan, and CBR year books.
5. Chaudhary M. Aslam, Human Resource Development.
6. Todaro – Development Economics
Fifth Semester
Subject: Development Economics
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
The deals with the issues and problems faced by developing countries especially Pakistan, the main objective of the course will to educate the students why there is a sharp discrepancies in living standard between developed and under developed countries. The course will help out the students to analyze how developed economies transformed themselves from a backward economy to a developed one and by poor countries are poor.
Course Outlines:
1. Introduction to Development Economics, Scope of Development Economics.Definitions of Economic Development and Growth,.. Characteristics of LDC’s. Meanings of Developed, Developing and Under Developed Economies Measurement of Economic Development and Growth. Per Capita Income approach, Quality of Life Index / HDI etc. Historical overview of world development and emerging major issues pertaining to Less Developed Countries (LDC’s).
2. Economic and non Economic Factors of growth, Determinants of Economic Growth, Kuznet, s characteristic of modern economic growth demand.
3. Major Theories of Development: Vicious Circle of Poverty, , Balanced and Unbalanced Growth, Nelson’s Low Level Equilibrium Trap , The Lewis Theory , The Rostow’s Stage
4. Theory The Big Push Theory Dualism, Types of Dualism & Reasons of Dualism.
5. Harrod-Domar Growth Model, Solow model of economic growth
6. Agriculture and Economic Development: Role of Agriculture in economic development, Reasons for backward agricultural sector in developing countries with special reference to Pakistan, Green Revolution, The Spread of Green Revolution in Pakistan and its Status / Contributions.
7. Industry and Economic Development: Role of Industry in economic development, problems faced by industrial sector in developing countries with special reference to Pakistan, Role of industrial sector in the development of agriculture sector as well as role of agricultural sector in the development of industrial sector.
8. Capital and Economic Development: Types of Capital, Role of capital in economic development, Capital formation, Reasons for low capital formation in Pakistan Sources of capital formation ( internal and external), strategies to boost the rate of capital formation.
9. Population and Economic Development: Human Resources as a source of growth and their contributions. Investment in education and returns
10. Fiscal policy and Economic Development: Role of Fiscal policy in developing countries to boost the rate of economic development, tools of fiscal policy and their usage under different economic conditions
11. Monetary Policy and Economic Development: Role of Monetary policy in developing countries to boost the rate of economic development, tools of monetary policy and their usage under different economic conditions
12. International Trade and Economic Development, why countries should trade, trade as a source of economic development in developing countries with special reference to Pakistan, types of trade liberalization
Recommended Books:
1. Balasubramanyam V. and Lall, S. (Latest eds.), Current Issues in Development Economics. McMillan , London.
2. Chaudhary M. Aslam and Hamid, A., (1989). Human Resource Development and Management in Pakistan. Ferozsons, Lahore.
3. Chaudhary M. Aslam and Eatzaz, A., (2004), Globalization: WTO, Trade and Economic Liberalization in Pakistan, Ferozsons, Lahore, Pakistan.
4. Chenery H. B. and Srinivasen. Hand Book of Development Economics, vol. I & II, Amsterdam (1988, eds.). North Holland.
5. Cypher J. M. and Dietz James L., (2004), The Process of Economic Development, Routledge. Tayl or Francis Group, London/New York.
6. Ghatak Subarta, (2003), Introduction to Development Economics, Routledge, Taylor and Francis Group, London/New York.
7. Herrick B. and Kindleberger C., (latest eds.). Economic Development. McMillan, New York.
8. Hirshman A. O., (1960). Strategy of Economic Development, Yale
University, Press..
9. Thirlwall, A.P., (2003), Growth and Development, With Special Reference to Developing Economies 7th edition, Palgrave Publisher.
10. Todaro M. P., Economic Development in the third World. Latest
Edition, Heinemann, London.
11. UNDP, Human Development Reports , Annual Reports.
12. Van Den Berg H., (2001), Economic Growth and Development,* McGraw Hills.
Subject: Econometrics-I
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
This course introduces students to the introductory topics of econometrics including: multiple regression analysis, estimation and inference, multicollinearity, generalized least-squares, hetroskedasticity, autocorrelation, model specification, and dummy dependent variables. Students are also introduced to the use of standard PC based econometric software.
Course Outlines:
1. Introduction: Definition and scope of econometrics, Econometric models vs. Statistical models. Ingredients of econometric modeling. Specification, estimation, verification or evaluation and forecasting
2. The Classical Linear Regression Model
(a) The Simple Linear Regression Model (SLRM): Estimation of SLRM by Ordinary Least Squares (OLS) Interpretation of Estimated Coefficients and their Economic Meanings.
(b) The Multiple Linear Regression Model (MLRM)
Estimation of MLR model by OLS and its assumptions Interpretation of estimated coefficients and their economic meanings, Computation of elasticities and standardized coefficients Using R2 as a measure of ‘Goodness of Fit’ and some Problems with its use.
(c) The General Linear Regression Model (GLRM)
Estimation of GLRM by OLS through Matrix Approach Var-Cov matrix
of estimated coefficients.
(d) Evaluating an Estimated Linear Regression Model
Testing the significance of individual coefficients. Testing the
significance of the model as a whole. Multicollinearety What is Multicollinearety? Distinction between perfect Multicollinearety and less than perfect Multicollinearety (Multicollinearety problem). Consequences of Multicollinearety problem, methods for detection of
Multicollinearety problem. Remedial measures for Multicollinearety problem.
3. Heteroskedasticity: What is Heteroskedasticity and what are its causes? Consequences of Heteroskedasticity for OLS estimation. Methods for detection of Heteroskedasticity. Remedial measures for Heteroskedasticity.
4. Autocorrelation: What is Autocorrelation and its Causes? Consequences of Autocorrelation for OLS estimation. Methods for detection of Autocorrelation. Remedial measures for Autocorrelation.
5. Forecasting with a Single Equation Regression Model: What is forecasting and what are its various types? Important features of a good forecast. Variance of unconditional forecast error. Variance of conditional forecast error. Measures for evaluating the forecasting power of a model.
6. Errors in Variables, Time as a Variable, Dummy Variables,
Grouped Data, Lagged and Distributed-Lag Variables: Errors in variables. Time as a variable. Dummy variables. Estimation from grouped data. Exogenous lagged variables. Endogenous lagged variables. Methods of estimation of lagged models.
7. Identification: The problems of identification. Implications of the identification state of a model. Formal rules for identification. Identifying restrictions. Tests for identifying restrictions. Identification and Multicollinearity.
8. Simultaneous Equations Models: Why Simultaneous Equation Models? Various Types of simultaneous equation Models. The identification problem. Checking the identification state of a model or of a particular equation in the model by Order Condition, bogus equation and reduced from approaches. Identification and methods of estimation.
Recommended Books
1. Gujrati, D. Basic Econometrics , 3rd Edition, ” McGraw Hill, (Latest).
2. Intrilligator Econometric Model, Techniques and Applications, N. J.
Printice Hall, (Latest).
3. Johnston, J.Econometric Models, McGraw Hill, (Latest)
4. Koutsoyiannis, A.Theory of Econometrics, McMillan, (Latest).
5. Maddala, J.S. Econometrics, McGraw Hill, New York, (Latest).
6. Wonnacot, R.J. Econometrics, John Wiley, New York & Wonnacot, E.
7. Madnani, G.M.K Introduction to Econometrics Principles and Applications, (Latest Edition)
8. Pindyck & Econometric Models & Economic Forecasts, 3rd
9. Rubenfeld Edition, McGraw Hill Inc. 1992.
10. Maddala, J. & Kim Unit Roots, Co-integration and Structural Change,
Cambridge University Press, 1998.
Subject: Intermediate Macroeconomics
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
The course develops a framework for the determination of macroeconomic aggregates such as GDP, the level of employment, consumption and investment expenditures, and price variables such as the general level of prices, the rate of interest and the wage rate. The course helps an understanding of the causes of business cycles and the determinants of the long run economic growth. The general methodology is the “market clearing approach” which is a departure from the traditional Keynesian treatment of macroeconomics.
Course Outlines:
1. Introduction and National Income: The Development of Macroeconomics, Actual vs. Potential Output, Analytical Approach to Macroeconomics. Circular Flow of National Income, Measurement of GNP: Expenditure Approach, Product Approach/ Income Approach, GNP as measure of welfare. Leakages and Injections: Saving and Investment and their Role. Nominal and Real Variables. Economic Models, Exogenous and Endogenous Variables and their Functional Relationships. Leading and Lagged variables. Measuring Unemployment: Oken’s Law. How to build simple Macroeconomic Models, Price Indices; Inflation Indexes, Deflation and Stagflation. Introduction to Keynesian and Classical School of Thoughts.
2. Theories of Consumption and Their Implications: Theories of Consumption: Duesenbury Hypothesis, Keynesian Consumption Function. Permanent Income Hypothesis / Life Cycle Hypothesis, Beyond Permanent Income Hypothesis, Kuznet’s findings and Reconciliation of Marginal Propensity to Consume and Average Propensity to Consume and Evidences. Mathematical derivation of Consumption Models. The MPS Model, Wealth effect in the Static Model. Implications of Consumption Theories for Policy Formulation and Stabilization Policy. Random Walk Model.
3. Saving and Investment: Definition and Kinds of Investment; Autonomous and Induced etc. Determinants of investment. Present Value Criteria for Investment. Investment Demand and Output Growth. Tobin’s Q-Theory. Lags in Investment Demand. Derivation of IS-curve, Shape of IS-curve. Volatility of Investment. Investment Demand and Fiscal Policy. Shifts in Investment Demand Curve and output determination.
4. Money Market: The Demand and Supply of Money. Money Demand and its Determinants, Regressive Expectation Model. Portfolio Balance Approach, Empirical Estimation of Income and Interest Elasticities. Supply of Money, Determinants of Money Supply. Measurement of Money Supply and its implications, Instruments of
5. Monetary Policy: Interest Sensitivity of Money Supply. Quantity Theory of Money and its Critical Review. Fischer effect, Money, Prices and Inflation. Derivation of LM Curve and its Slope. LM Curve and Money Market Equilibrium. Interaction of IS-LM and Equilibrium.
6. Aggregate Demand, Supply and Stabilization Policy: Production Function, Demand for Labor and Capital, Labor Market and its Equilibrium. Demand for Goods and Services: Aggregate Demand and its Components. Equilibrium of Aggregate Demand and Supply: Mathematical Solution and Equilibrium. Saving and Investment Balance. Derivation of Simple Multiplier, Tax Multiplier. Inclusion of Imports and
Multiplier. The Sticky Wage Model, Insider-Outsider Models. The Workers
Misperception Model, The Imperfect - Information Model, The Sticky Price Model. Rational Expectation (RE), Adaptive Expectations. Keynesian Models: Liquidity Trap. Effectiveness of Policy and Price Rigidity. Slope of Aggregate Supply and Demand Curves. Grand Aggregate Demand Curve. Interaction of IS-LM and Determination. Classical and Keynesian Models. Shocks to Aggregate Demand and Supply and Stabilization Policy. Supply Side Economics. Stagflation and Stabilization Policies. Short-run – Long-run Philip Curves. Ineffectiveness of Keynesian Policies.
7. Open Economy and Macroeconomic Stabilization:
Exchange Rates and their Determinants: Mundell - Fleming Model (MFM): Small open Economy with perfect Capital Mobility. IS-LM: Goods and Money Market. Small Open Economy, Floating Exchange Rate and Fiscal Policy. Fixed Exchange Rate and Fiscal Policy. Flexible and Managed Exchange Rates. Monetary Policy, Devaluation and Recovery from great depression. Trade Policy: Mundell-Fleming Model (MFM) with changing Price Level. MFM and large open Economy. Depreciation and its impacts. Income Absorption Approach and exchange Adjustment and Balance of Payment.
8. Macroeconomic Policy Debate: Policy Actions: Active or Passive, Ignorance, Expectations and the Lucas Critique. Conduct of Policy: Rule vs. Discretion, Distrust of Policy makers and Political Process. Macroeconomics Policy: Rules for Fiscal Policy, making Policy in uncertain World. Seignorage and Inflation: What can Policy Accomplish? Monetarists vs. Activists debate. Phillips Curve: Short run and Long run analysis. The expectation augmented Phillips Curve. Money Inclusion and output. Short Run and Long Run Adjustment. Perfect Foresight and Adjustment.
9. Economic Fluctuation and Its Sources :The Theory of Real Business Cycles: Interpretation: Labor Market, Technology Shocks. Household Behaviour, the persistence of output Fluctuations. Limitations of the Model. The Challenges: What we know and what we don’t know? Long-run and Country’s Capacity to Produce. Short-run and influence of Aggregate Demand. Random Walk Model. What Determines Inflation Rate, Unemployment Rate and Output Growth? Can we revise Natural Rate of Output? Should we stabilize the Economy? The cost of Inflation? The problem of Budget Deficit?
Recommended Books:
1. Branson, William H., (1979), Macroeconomic Theory and Policy, Harper and Row Publishers, New York / London.
2. Branson, William H., and Litvack James M., Macroeconomics, (Latest Edition), Princeton University.
3. Glahe, Fred R., (Latest Edition), Macroeconomics, Theory and Policy, Harcourt Brace Jovanovich Inc.
4. Mankiw, Gregory N., (2000) Macroeconomics*, Worth Publishers, New York.
5. Peel D. and Minfow P., (2002). Advance Macroeconomics, Edward Elgar, Cheltenham, U.K.
6. Romer, David, (2001). Advanced Macroeconomics, McGraw Hills, New York / London.
7. Sargent, Thomas J., (1988) Rational Expectations and Inflation*, Harper and Raw Publishers, New York / London.
Subject: Public Finance
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
This course explores the role of the government in modern market economies, focusing primarily on issues of importance to Pakistan with additional illustrations from other developing countries and the US. We will examine justifications and effects of government policies looking primarily at the efficiency and equity implications of taxation and spending policies. We will begin most sections by going over the economic theory, then review empirical issues, topics include: public choice theory, corruption and bureaucracy, transfer programmes for the poor, health programmes, education, environmental tax policy, personal income taxation, and land and capital taxation.
Course Outlines:
1. Introduction and Role of Public Sector: The Economic Functions and Public Goods: Allocation of Resources, Redistribution of Income and Wealth and Stabilization. Pricing Public Goods.
2. The Theory of Public Goods: Fiscal Principles and Concepts: The Traditional Principle of Tax Neutrality is Expended Principle of Fiscal Neutrality. Exhaustive Vs. Non-Exhaustive Public Expenditures, Income Elasticity of Government Expenditures, Tax Vs. Non-tax Revenues, Microeconomic Vs. Macroeconomic Regulatory Taxes, Tax Base, Tax Rate Relationship; Progressive, Regressive and Proportional Taxes, Marginal Propensity to Tax and Marginal Vs. Average Tax Rates; Income Elasticity of a Tax Integral Fiscal Non-Neutrality. Tax Efforts and Tax Collection Performance in Pakistan.
3. Public Revenue and Taxes: The Economic Case for the Public Sector to Allocate Resources: Market Imperfections, Decreasing Costs of Production, Public Goods and Externalities. Pricing Decreasing Cost Industry.
4. The Theory of Public Goods: Public and Private Goods, Pure Public Goods, Should Public Sector be Produced Vs. Private Goods? Semi Public Goods, Merit Goods, Free Rider Problem, Externalities and Public Policy.
5. Distributional Equity in Taxation: The Ability to pay and Economic benefits (received), Cannons of Taxation, The Optional Income Tax Approach. Optimum Tax and Revenue Collection.
6. Tax Structure of Pakistan: Various Kinds of Taxes and their Objectives / Performance in Pakistan. Income and Sales Taxes, Excise and Custom Duties, Export and Import Taxes, Tax Reforms in Pakistan and their Impacts. General Equilibrium Vs. Partial Equilibrium: Tax Incidence Analysis. Determinants of Tax Shifting under Partial Equilibrium Conditions. Impacts
of Tax Shifting on Price.
7. Fiscal Policy: Public Expenditure and Budget: Theories of Public Expenditures, Wagner’s Law, Efforts of Public Expenditures. Components of Public Expenditures in Pakistan, Sources and Direction of the Growth of Public Expenditures. Kinds of Budget, Surplus, Deficit and Balanced: Preparation of Budget Cycle in Pakistan, Development and Non-Development Budget and its Patterns. Zero Based Budget, Planning, Programming Budgeting System.
8. Fiscal Relations: Fiscal and Economic Aspects of Federalism, Federal – Provincial Fiscal Co-ordination, Collection of Revenue and Provincial Share and its Distribution Criteria. Deficit Financing and its Impacts.
Recommended Books
1. Bernard P. Herber, (1999), Modern Public Finance.
2. Chellieah R.J. (Latest eds.), Fiscal Policy in Less Developed countries.
3. David N. Hyman, (1996), Public Finance, A Contemporary Application of ---. Harcount Brace College Publishers.
4. Govt. of Pakistan, Economic Survey, Yearly Publication, Ministry of Finance, Economic Advisory Wing, Islamabad.
5. Rosen and Harvey S., (1999), Public Finance, McGraw Hill.
6. Musgrave R.A. and B.P., Musgrave (Latest Eds.), Public Finance in Theory and Practice, McGraw Hill.
7. Stiglitz E., (2000), Economics of The Public Sector, W. W. Norton & Co.
Sixth Semester
Subject: Money and Banking
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Outlines:
The course discusses financial processes emphasizing the role of the financial intermediaries. Particular emphasis is on banking sector, implications for economic growth and stability, monetary policy in Pakistan, and the role of the State Bank of Pakistan. Other financial intermediaries such as insurance companies, brokerage houses, mutual trusts, and Modarabas will also be discussed.
Course Outlines:
1. Introduction and Development of Monetary Mechanism: Evolution of Money and Payment System. Definition of Money Function of Money & Measurement of Money. Demand for Money & Supply of Money. Definitions of Money, M1, M2, M3, L etc.
2. Role of Money in the Economy: Debate on neutrality and non-neutrality of Money. Classical Dichotomy and Keynesian Integration of Nominal and Real Sectors. Role of Money in the IS-LM Framework. Money in Aggregate Demand & Aggregate Supply Analysis. Keynesian Vs. Monetarist views of Equilibrium Output, Employment and Prices.
3. Demand for Money: Quantity Theory of Money. Transaction Theories of Demand for Money. Portfolio Theories of Demand for Money. Baumol – Tobin Model of Cash Management. Friedman’s Restatement of Quantity Theory of Money: Empirical Evidence on the Demand for Money.
4. The Money Supply Process: Monetary Base, Keynesian Liquidity Preference Framework, Friedman’s Modern Quantity Theory of Money. Multiple Deposit Creation: Introducing the Money Supply Process. Determinants of the Money Supply: Exogenous and Endogenous. Understanding Movements in the Monetary Base, Money Multiplier. Velocity of Money and its variability. Explaining Depositor and Bank Behaviour: the Complete Money Supply Model. Regressive Expectation Model.
5. The Conduct of Monetary Policy: Central Bank: Structure and Functions of Central Bank. Independence of Central Bank and its role in Economic Growth. Tool of Central Bank for Money Control. Monetary Base. The Conduct of Monetary Policy: Goals and Targets. Tools of Monetary Policy: Three Major Tools of Monetary Policy. Required Reserve Ratio, Discount Window Loans and Open Market Operation. Advantages and Disadvantages and Impact Analysis of each Policy Tool. Central Bank as a lender of last Resort. Financial Intermediateries. Monetization of Public Debt. Infectiveness of Stabilization Policies. Targeting interest rate and inflation.
6. Money & Interest Rates: Determinants of interest rates. Kinds of Interest Rates. The Behavior of Interest Rates. Understanding & Measuring the Interest Rates. Real & Nominal Interest Rates, Theories of Interest Rate Determination. The Risk and Term Structure of Interest Rates. The Distinction Between Interest Rates and Returns. Maturity & Volatility of Bond Returns. Portfolio Choice: the Theory of Asset Demand.
7. Money and Inflation: What is Inflation & Causes of Inflation? Demand – pull Inflation, Cost – push Inflation, Stagflation & Hyperinflation. Inflation as a Monetary Phenomenon. The Philips Curve and Accelerating Inflation. Inflation in Pakistan: Sources and Managing Policies. Sources of Inflation in Pakistan: Spiracle Evidences. Policies to Combat Inflation in Pakistan.
8. Monetary Policy in International Framework: Money Demand and Empirical Evidences. Money in Growth Models. Inflationary Spiral. Current Issues in Monetary and Financial Sector Reforms. Conduct of Monetary Policy in Fixed and Flexible Exchange Rates. Perfect Mobility of Capital and Money Control, Effectiveness of Policy. Impact of Reserves on B.O.P and Exchange Rates. Targeting exchange rate. Managed Exchange Rate System and Monetary Policy. Targeting Inflation. Exchange Rate and Balance of Payment.
Recommended Books
1. Bennett T. McCallum, (1989), Monetary Economics, Theory and Policy, McMillan.
2. Fredric S. Mishkin, (1995), Financial Markets and Money, Harper & Row Publishers.
3. Laider, David E.W (1996), The Demand for Money: Theories, Evidence and Problems (Fourth edition), Harper & Row, Publishers, New York.
4. Miller, R. L. and David VanHose, (2001), Money, Banking & Financial Markets. South Western, Singapore.
5. Mishkin, Frederic S., (2001), The Economics of Money, Banking and Financial Markets. (Sixth edition). Addison Wesley, New York.
6. Vanish K., Monetary Theory, (2000), Vikas Publishing House, Delhi.
7. Patinkin Don, Money, Interest and Prices, Harper and Row
Subject: International Trade
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
This course covers the trade theory and policy section of the international economics, which include the gains from trade and models predicting the pattern of trade and factor flows among nations. Among the topics covered are comparative advantages, Richardian model, the Heckscher-Ohlin model, imperfect competition and international trade, international factor movements and the instruments of trade policy.
Course Outlines:
1. Importance and Bases of Trade: Why Study International Economics? The Changing World and Interdependence: Basis of Trade, Gains from Trade. Absolute Advantage, Comparative Advantage, Overview of Comparative Advantage and Pattern of Trade. Offer Curves and Free Trade Equilibrium. Disagreements on Free Trade: Overview of Emergency of International Trade Issues. The Elasticity of Exports Demand and Balance of Payment. Substitution and Income Effects, Impacts of Rise in Exports Demand.
2. Growth and Trade: International Trade and Shift in Production Function, Immerizing Growth, Output Growth and Terms of Trade (T.O.T) / Deterioration: Uniform Growth at given T.O.T. The Transfer Problem: Marshall Plan and Transfers, Transfer of Resources: Neutral Case.
3. Technology and Factor Endowment: Ricardian Trade Model, World Production and Gains. Comparative Cost and Trade Pattern. National and World Gains from Trade. International Wage differentials and Productivity. Technical Progress and International Gains. WTO and Gains from Technical Progress: Impacts on Prices. Equilibrium Production and Consumption: Non-traded and Tradable, Costs, Marginal Physical Product and Production Possibilities. Production Possibilities with Diminishing Returns, Increasing Opportunity Cost. Free Trade and Income Distribution, Relative Demand, Supply and Pattern of Trade. Dutch Disease and its application.
4. Factor Endowment and Heckscher – Ohlin Theory: Output and Factors Rewards in 2*2 Model. Factor Intensity Comparison. Heckscher- Ohlin (H.O) Model, The Role of Demand, Factor’s Prices and Commodity Prices, Factor Price Equalization, and Factor Intensity Reversal. Newly Industrializing Countries (NIC’s) and Footloose Production Process. NIC’s and H.O Theorem. The Product Cycle, Critical Analysis of Traditional Trade Theories. Rybescky Theorem and its critical review.
5. Markets, Cartels and International Trade: Monopoly and Import Competition, Export Opportunities. Product Differentiation and Monopolistic Competition. Dumping / Discrimination and WTO, Competitiveness and Market Share, Gains from Migration. WTO and Factor’s Movements and the Commodity Movement. Multinationals Firms and Foreign Direct Investment, Transfer of Capital, Technology, Skill and other Gains, Transfer of Resources and Transfer Problem.
6. Tariff, Quota, Trade Policies and WTO: Tariff and Small Country: Effects of Tariff, Price and Demand for Imports, Welfare impacts. Impacts of Tariff on Government Revenue, T.O.T Production and Welfare. Impact of Tariff on Domestic and World Welfare. The Optimal Tariff. Tariff and Distribution of Income. Brief Introduction of Tariff and WTO Laws, Tariff and Second Best Choice, Subsidies and Quota, Voluntary Quota, Growth with Protection vs. Free Trade Gains and WTO. Managed Trade, Quantitative Restrictions, Voluntary Export Restrictions and Their Impacts. Trade Diversion and Preferential Arrangements. WTO: Injury, Anti-dumping Duties, Tariff and B.O.P Support. Success and Failure of WTO Agenda. WTO Rules: Sanitary, Phytosanitary, Dumping, Anti-Dumping etc Rules and Emerging New Issues and Their Impacts.
7. Major Contemporary International Economic Issues: WTO: GATT and Emergency of WTO. Why necessary to Join WTO? WTO: Major Trade Rules and Their Expected Impacts on Trade, B.O.P Deficit. WTO and Fair Trade / Free Trade. Free Trade will it be? Issue of “Are Free Trade Gains more than Restricted Trade”? Emerging Regional Trading, Blocks, Special Preference and their Impacts. Issues relating to the Contributions of International Financial Institutions and Their Evaluations. Is there need to Reform International Institutions? Monetary Integration and Their Impacts. Terms of Trade Issue.
Recommended Books
1. Caves Richard, E., and Jones Ronald W., World Trade and Payments: An Introduction, Latest Editions. Little, Brown and Company, Boston, Toront. Latest edition..
2. Chacholiades, Miltiades, International Trade Theory and Policy (Latest Edition). McGraw Hill Book Company, New York, London, Latest edition.
3. Donomick Sal Vatore B., International Economics (Latest Edition), Prentice Hal, Latest edition.
4. Grubel Herbert C., International Economics, (Latest Edition) Richard D. Irwin Inc., Honewood, Illinois.
5. Peter Holinder & Thomas A., Pugel., International Economics. Latest edition.
6. Sodersten B. and Geoffry Read., (1994). International Economics, MacMillan Press Ltd. Latest edition.
7. The Global Competitiveness, Report 1999, World Economic Forum, Oxford University Press, Oxford, New York.
8. World Bank. World Development Report, 1986. Oxford University Press.
Subject: Econometrics-II
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
This course will be devoted to linear regression models. Emphasis will be on learning how to set up and use regression models in applied situations. The role of testing as a means of differentiating between valid and invalid models will be emphasized. Contemporary issues relating to co-integration and its application in models for consumption and money demand will also be discussed.
Course Outlines:
1. Introduction to Advanced Econometrics: Properties of CLS revisted, using multiple regression to describe a linear relationship. Interpretation of Beta coefficients. Errors in variables. Time as a variable. Dummy variables. Estimation from group data. Estimation from pooled data. Exogenous and endogenous lagged variables. Methods of estimation of lagged models. The General Linear Regression Model (GLRM): Estimation of GLRM by OLS through matrix approach. VAR-COV matrix of estimated coefficients.
2. Identification: The problems of identification. Implications of the identification. State of a model. Formal rules for identification. Identifying restrictions. Testing for identifying restrictions. Identification and multi-co-linearity.
3. Simultaneous Equation Models: Why simultaneous equation model? Types of simultaneous equation models. The identification problem. Checking the identification – in the model by order condition. Bogus equation and reduced form approaches. Identification and methods of estimation. Consistent estimation of parameters of simultaneous equation models: indirect least square estimation. Two stage least squares estimation. Instrumental variables. Method of estimation.
4. Varying coefficient models: Causes of coefficient variation. Randomly varying coefficient models. Systematically varying coefficient models.
5. Time Series Analysis: ARIMA Models. Comparison of forecast based on ARIMA and regression models. Unit roots and co-integration. Dummy trap and its detection.
6. Econometric forecasting: Stationarity, impulse response analysis. ARCH Models, VAR Models. Cointegration and error correction models.
Recommended Books
1. Gujrati, D. Basic Econometrics , 3rd Edition, ” McGraw Hill, (Latest).
2. Intrilligator Econometric Model, Techniques and Applications, N. J. Printice Hall, (Latest).
3. Johnston, J.Econometric Models, McGraw Hill, (Latest)
4. Koutsoyiannis, A.Theory of Econometrics, McMillan, (Latest).
5. Maddala, J.S. Econometrics, McGraw Hill, New York, (Latest).
6. Wonnacot, R.J. Econometrics, John Wiley, New York & Wonnacot, E.
7. Madnani, G.M.K Introduction to Econometrics Principles and Applications, (Latest Edition)
8. Pindyck & Econometric Models & Economic Forecasts, 3rd
9. Rubenfeld Edition, McGraw Hill Inc. 1992.
10. Maddala, J. & Kim Unit Roots, Co-integration and Structural Change, Cambridge University Press, 1998.
Subject: Research Tools and Techniques
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
This course has been designed to expose students to a myriad of tools available for conducting research especially in the business world. The overall objective is to provide students with a broad perspective about research methods and practical applications of research concepts that all managers need to know so as to be effective on their jobs. More specifically, the learning objectives for the course are: (i) To understand the various components and stages of research process. (ii) To learn the strengths and limitations of various techniques used for conducting research in different areas. (iii) To learn how to design your own manageable research project
Course Outlines:
1. Introduction. Introduction & value of Research. Types of Research. Research Process. Formulating a Research Problem. Reviewing the Literature. Reasons and Procedures of Literature Review. Formulation of Objectives
2. Identifying Variables. Definition of variable Types of Variable Types of
measurement scale Research Methodology Constructing Hypothesis Functions of Hypothesis Characteristics and Types of Hypothesis
3. Research Design. Selecting a Study design. Elements of research design Quality of
Research. Measuring Techniques. Validity-types and importance. Reliability
4. Constructing an instrument for data collection. Data collection methods. Sources of data. Primary and secondary data
5. Selecting a sample. Sampling. Principles and types of sampling. Calculation of sample size.
6. Writing a research proposal. Considering ethical issues in data collection
Processing data. Editing data. Coding data
7. Developing a frame of analysis. Analyzing data. Displaying data
8. Writing a research report
9. Presentations of projects
Recommended Books:
1. Birchenhall C. and Grout P., (latest edition), Mathematics for Modern Economics,
Herifaq Publishers, New Delhi.
2. Holt, Rinehart and Winston, Holt-Sounders Japan Ltd. Tokyo (Latest edition).
3. Johnson, Glenew Research Methodology for Economists: Philosophy and Practice, McMillan Publishing Co. (Latest edition).
4. Kidder Louise H., Research Methods in Social Relations.
Seventh Semester
Subject: International Finance
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objective:
This course is a detailed examination of foreign exchange markets, emphasizing theoretical and empirical issues and their relation to both economic and business environment. Topics include: exchange rate determination, exchange rate regimes, the balance of payments, forward, future and option markets, and debt crisis of developing countries.
Course Outlines:
1. Foreign Exchange Market and Exchange Rate Determination: Foreign Exchange Rates (F.E.R): What it represents? Real, Nominal and Effective Rates. Determinants of Foreign Exchange Rate. Efficient F.E.R Market. Dynamic Theory of Interest and Exchange Rate. The Theory of Spot Exchange Rate Determination. Capital Flow and Speculations. Forward Exchange Market, Interest Arbitrage, Interest Parity Theory, Speculators, Hedgers and Traders, Forward Exchange Rate Policy.
2. Purchasing Power Parity, Exchange Rates and Balance of Payments (B.O.P):Purchasing Power Parity (PPP): Non-Trade Goods, Balance of Payment Effect. Test of Exchange Rate Instability. Impacts of F.E.R. Rate Instability. B.O.P: Income Absorption Approach to B.O.P. Elasticities of Exports and Imports and Impact on B.O.P. The Marshall- Larner Conditions. Monetary Approach to B.O.P. Monetarist Critique to the Keynesian Closed Economy Model. B.O.P. Effects of Stabilization Policies. Empirical Tests of Monetary Approach to the B.O.P. WTO and B.O.P Support. Adjustment with Short-run capital Flow. Methods dealing with undesired Short-run Capital Flow.
3. Open Economy: Monetary and Fiscal Policy: Monetary and Fiscal Policies: Internal and External Balance. Monetary and Fiscal Policy with Fixed Exchange Rates. Problems of Small Country: Fixed Exchange Rate, Free Floating Exchange Rate, Managed Exchange Rate and Critical Review of The Fiscal – Monetary Mix Models. Fiscal Policy and Temporary Payment Imbalances. Monetary Policy and Permanent Payments Imbalances, A Random Walk Model of Payment Imbalances. Critical Review of the Modern Theory and Adjustment Mechanism.
4. International Institution: Trade, Capital and B.O.P: Introduction of International Institutions, Role and Major Activities of IMF. IMF Credit Facilities. Loan Mechanism, Value of SDRs. The Optimum Quantity of Reserves, Optimum Interest Rate. Euro-Dollar, Dollar Exchange and Impacts. Role of IMF in B.O.P Support and Stabilization.
5. International Movements of Factors and Welfare: Impacts /Issues:
Facts on International Capital Flow: ASEAN Crisis and Role of International Institution and Criticism. Motive for Capital Movement: Return and Risk Diversification. Why disagreement on International Movement of Labour? Welfare Impacts of Labour Movements. Factors of Production and Price Equalization Issues. Losses of National Sovereignty. Can Developing Countries Compete and Gain from Trade: Terms of Trade
due to Demand Pattern and its Impacts. What Counts for wage Differential Between Primary Goods Producer and Value Added Goods Producer, Competitiveness Issue.
6. International Institutions and Flow of Capital: WTO: GATT and Emergency of WTO. Why necessary to Join WTO? WTO: Expected Impacts on Trade, Liberalization and B.O.P; Special Status of Developing Countries and Net Food Importing Countries. Protections under WTO Rules. Are Free Trade Gains more than
Restricted Trade? Gains for whom; how much and how long? Centre- PeripheryTheory.
Subject: Labour Economics
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
This course examines labor supply decisions of workers and the labor demand decisions of firms. Considerable attention is devoted to policies and institutions affecting supply and demand. The course is divided into six modules. The first three modules follow the standard distinction in economics between households and businesses. In module 1 and 2, we discuss how the households choose to allocate their time between home and work. Major questions deal with how the value of individuals’ time at home and in the labor market affects their decisions, including choices about how much formal and informal education and on-the-job training to acquire. Module 3 discusses businesses’ demand for workers. The main issues relate to how a higher cost of labor affects this demand and how businesses’ choose between hiring more workers and having their existing workers put in longer hours. Modules 4 through 6 build directly on the first two modules by bringing labor supply and labor together in variety of ways. Module 4 focuses on the interaction of supply and demand to determine equilibrium wages and employment levels. Migration between geographical areas and mobility between jobs will also be discussed in this module. In module 5, we discuss the issues within the context of a general search and matching labor market equilibrium framework. Module 6 examines the aggregate economy. It focuses on how the decisions of individuals and firms affect the earnings inequalities based on gender, race, and occupation.
Course Outlines:
1. Importance of Labor Economics: Introduction: Industrialization and Emergence of Labor Economics. Tools to Analyze Labor Markets and Conditions. Overview of Labor Issues in Developing and Developed World.
2. Labor Markets Analysis: Demand for Labor: Labor Market Indicators, Demand for Labor, Decision Making and Labor Hiring. Labor Migration: Reasons and Impacts. Demand for Labor by Firms, Short Run and Long Run Demand for Labor, Industry and Market Demand.
3. Labor Market: Supply of Labor and Wages: Determinants of Labor Supply. Concepts of Human Capital, Human Capital, Productivity and Wages. The Determinants, Labor Force Participation. Supply of Labor and Household Productions. Labor – Skill, Training and Productivity. The Dual Labor Market Theory. Labor Unions and Wages. Supply and Demand for Labor and Wage Determination. Backward bending Supply Curve of Labor.
4. Wages, Unemployment and Inflation: Determinants of Wages, Market Determination of Wages and Marginal Productivity, High Wages and Involuntary Unemployment. Stagflation and Unemployment, Structural Adjustment and Wages. Major Sources of Unemployment, Wages and Phillip Curve. Wage Rigidity, Labor Unions and Unemployment. Unemployment and Social Protection.
5. Labor Market Discrimination: Discrimination in Labor Market: Gender, Race and Ethnicity. Efficiency Wage Theories and Coordination Failure.
6. Labor Market Information System: Labor Market Information System and Efficiency, Labor Statistics and Labor Policy. Human Welfare and Labor Policy, Minimum Wages, Rationale and Impacts.
7. Theories of Labor Movements: The Marxist, The Wells, Selling and Pearlman’s contributions. Trade Unions in Pakistan, Labor Legislation in Pakistan. Impacts of Labor Union. Labor Policies in Pakistan: Critical Evaluation.
8. Child Labor:Definition and extent of child labor. Child labor; moral aspects. Child labor an international issue: Extent of Child labor in developing countries. Child labor in Pakistan. Policies to combat child labor. Child labor and international trade issue.
Recommended Books:
1. Comith Stephen, (2003), Labour Economics, Routledge Publishers.
2. Bruce, Kaufman; e. Kaufman, Julie L; Hotchkiss, (2002), Economics of Labour Markets, Thomson Publisher.
3. Current Issues in Labour Economics, (1989), Palgrave Mcmillan.
4. Reynolds, Labor Economics and Labor Relations.
5. Orley, Ashenfelter (edt), Layard, P. R. G., (edt), Hand Book of Labour Economics,
Elsevier Science Pub. Co. (1986).
Subject: Islamic Economics
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Outlines:
1. Introduction to Islamic Economics: Definition, nature and theoretical foundations of Islamic Economics, conceptual differences between Islamic and Conventional (Neoclassical) Economics, Positive versus Normative Economics, the Islamic value system and economic behavior.
2. Consumer’s Behavior: Absolute versus limited freedom, restricted set of preferences, distinction between lawful and prohibited activities (Halal- Mubah and Haram-Makruh), moderation in consumption, altruism, disposable income after charitable donations (Zakah, and Sadaqat), Utility function and consumer’s equilibrium in an Islamic framework.
3. Behavior of the Firm: Business Ethics in Islam, Permissible and prohibited activities, Cooperation and Coordination for social advantage, behavior of the firm, Forms of business organization: Proprietorship, Partnership (Muzara’h, Mudharbah, Mushrakah), Joint Stock Company (Sharikah), Factor pricing, the status and role of labor in Islamic perspective, market structure and resource allocation.
4. Money and Banking: The concept of Riba (interest): its interpretation and implications, rationale for prohibition of interest based transactions and gambling, models of interest-free commercial banking, financial instruments, Principles of financial contracts, insurance in Islamic perspective, Distribution in Islamic Perspective: Functional versus personal distribution, distributive justice as the pre-requisite for social justice, Islamic emphasis on wider circulation of wealth, share of the poor and destitute in wealth of others, guarantee for basic needs and sustenance, importance of Zakah.
5. Monetary Policy in Islamic Framework: The role of central bank: its powers and limitations, rudiments of a just monetary system, issues in interest free financial system, Islamic banking practice: problems and prospects, formulation and implementation of monetary policy in Islamic State, Inflation and indexation.
6. Fiscal Policy and Role of the State: Sources of revenue and heads of expenditure of an Islamic state, the scope for taxation, Objectives of fiscal policy: Justice in distribution and elimination of poverty, Economic impacts of Zakah & Usher: the multiplier effect, efficiency, equity, growth.
7. Economic Development and Planning: The extended role of an Islamic State, Economic growth as a component of the overall social development, Goals and strategies of development planning, emphasis on education and skill development, balance between moral and material growth, the problem of unemployment and remedial measures.
8. Islamization of the Economy: Islamic revival movement, efforts towards Islamization of the economies in Islamic world with special reference to Pakistan, reports of the CII and implementation issues, the role of various organizations for coordination among Muslim countries: OIC and ECO, the role of IDB (Jeddah) toward Islamization of the financial system, issues in Islamic Economics and Finance.
Recommended Books:
1. Khurshid Ahmed (Ed) Studies in Islamic Economics (1980). King Abdul Aziz
University Jeddah and The Islamic Foundation UK
2. Muhammad Arif (Ed) Monetary and Fiscal Economics of Islam: (1982). King
Abdul Aziz University, Jeddah KSA.
3. Ziauddin et al (Ed) - Money and Banking in Islam: (1983)
King Abdul Aziz University Jeddah & Institute of policy Studies Islamabad
4. M.N. Siddiqi, Banking without Interest & Issues in Islamic Banking (two Books), The Islamic Foundation, Leicester UK (1983)
5. Ziauddin et al (Ed) - Fiscal Policy and Resource Allocation in Islam:
(1983). King Abdul Aziz University Jeddah & Institute of policy Studies Islamabad
6. Munawar Iqbal (Ed) -Distributive Justice and need Fulfillment in an Islamic Economy (1986), IIIE, International Islamic University, Islamabad
Eighth Semester
Subject: International Political Economy
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Outlines:
1. Introduction: Meaning, Definition and brief Introduction of basic Concepts of Political Economy. Economic and Political Integration. Policy Reform and Popular Organization, key Social and Economic indicators. Political and Economic Institutions and their role in decision making. Linkages of Politics and Economics. Conceptualizing the Changing Global Order.
2. Political Economy and World Order: Problem of Power and Knowledge: New Millennium, Knowledge, Politics and Neo-Liberal Political Economy. New Voices in the Globalization Debate: Green Perspective, Regional Phenomena and State Order, New State Actors, Theory of Exclusion.
3. Regional Dynamics: Regionalism and Globalization, The Political Economy of European Integration, Regionalism in the Asia-Pacific Political Globalization and the Competition State. Economic Blocks and Political Blocks.
4. Political Economy of Economic Development: International Politics and Transfer of Technology, Sector Specific Development Limitation. Agriculture and Industry, Political Slogans and their Implementation, International challenge of poverty, The Political Economy of food grain prices, Rural Development. Regional Exporting Blocks and their Markets.
5. Political Economy of Pakistan: The Economics of Patronage, Seven Pillars of good Governance. The Political Economy of Reforms. Pakistan - Dynamics of Elitist Model. Strategies for self-preservation, A military Theocracy, Different Regimes, Economic Development, Ethnic conflict, the Role of State. Emerging Economic and Political Issues and their linkages. Regionalism, Poverty and Governance etc.
6. SAARC: Political & Economic Aspects: Economic Aspects, Poverty Eradication, Trade & Economic Cooperation, Cooperation with Regional NGO's in South Asia. Pakistan and SAARC: Composition of Trade, Foreign Trade Trends in External Trade, Direction of Foreign Trade, Trends of Trade with SAARC. Future Economic Prospects of SAARC.
7. Issues in Lawlessness and Development: Introduction, Economic Crimes, Terrorism & Insurgency, Theories of the Economic impact of Law & Order.
8. Socio Economic Developments & Crime: A Review of Socio-Economic Situation in Pakistan, Urbanization, Housing, Unemployment, Poverty, Juvenile Delinquency, Health Hazards. Environment and Externalities.
9. Global Issues: Global Issues in Historical Perspective, Capital Mobility and Global Order, Opening up of Services Sector and its benefitries. Will there be free mobility of factors of production? Capital, labor and entrepreneurs etc. Multinationals: Objectives, Contribution and their Mobility. Emerging World Financial Order. The Group of Seven and Political Management of the Global Economy, Big Businesses and New Trade Agreements, Trade Blocks.
Recommended Books
1. Azhar, H. Nadeem (2002), Pakistan: The Political Economy of Lawlessness, Oxford University Press.
2. Gupta, S. Dev, The Political Economy of Globalization, Kluwer Academic Publishers. (Latest eds.)
3. Hagen Everett E., The Economics of Development, Richard D. Irwin, Inc. (Latest eds.).
4. Hussain Ishrat, (2004), Dollars, Debt and Deficits, Reform and
Management of Pakistan Economy, Oxford University Press.
5. Kardar Shahid, The Political Economy of Pakistan, Progressive Publishers, Pakistan.(Latest eds.).
6. Kher, R.S. (2004), SAARC: Political & Economic Aspects, Dominant Publishers and Distributors.
Subject: Financial Economics
Total Credit Hours: 3 Lectures Credit Hours: 3
Lab. Credit Hours: 0
Course Objectives:
This course provides a basis in the neoclassical theory of finance that underlies other finance courses. This course is primarily concerned with static, i.e. one period, theories of finance. This course will convey more conceptual understanding of finance than exercise complicated mathematical derivations. It starts with examining the data and then develops basic finance theory to explain the data. Following this course, students should be prepared for advanced courses in finance, such as dynamic theories, continuous time finance, empirical finance, and advanced corporate finance.
Course Outlines:
1. Finance and Data. Stylized Facts. Static Portfolio-Consumption Problem. Two States of Nature and Complete Markets. Arbitrary State Space: One Riskless Asset and One Ricky Asset. Finite State Space Model and General Portfolio Problem. Arrow-Debreu Markets. Complete Market and Options
2. Fundamental Theory of Finance. Absence of Arbitrage and Efficient Markets. Existence of Positive Linear Pricing Rule. Risk Neutral (Martingale) Probabilities and State Pricing
3. Arbitrage Pricing Theory: Basic Structure. Infinite Dimensional and Hilbert Space Approaches
4. Options, Derivatives and Other Financial Instruments. Options. Futures and Forwards. Valuing Options—Binomial Case
5. Introduction to Corporate Finance. Modigliani-Miller (MM) Theorem. Preferences and Uncertainty Expected Utility Theory. Linear Risk Tolerance Preferences
Jensen’s Inequality and Risk Aversion. Ordering Preferences by Risk Aversion. Stochastic Dominance . Insurance and Certainty Equivalence. Alternative Psychological and Behavioral Approaches
6. Mean Variance Theory, Spanning and Separation Theorems. Distribution vs. Preference Based Approaches to Mean Variance Optimization. Skewness and Alternative Approaches
7. Capital Asset Pricing Model (CAPM). Sharpe-Litner-Mossin Theory Riskless Assets and Zero Beta Theory: Linear Pricing and Arbitrage. Roll’s Critique and Empirical Testing. Short Sales Restrictions and Borrowing Constraints. Systematic Risk, Performance Evaluation and Other Approaches
8. Asymmetric Information Models. Aggregation with Differential Prior Beliefs
Rational Expectations Equilibria: Conditioning on Prices. Agency and Signaling Models Market Microstructure.
Recommended Books:
1. Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001
2. John H. Cochrane, Asset Pricing, Princeton University Press, 2001
3. Jonathan E. Ingersoll, Theory of Financial Decision Making, Rowman & Littlefield, 2000
4. Jiang Wang, Financial Economics (in Chinese), Renmin Publishing, 2005