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125-532: Gokhale Institute of Politics and Economics ( GIPE ), commonly known as Gokhale Institute , is one of the oldest research and training institutes in economics in India . The institute was founded on 6 June 1930 by R. R. Kale as a centre for research and higher learning in economics. The institute was founded with an endowment offered to the Servants of India Society by Shri R R Kale. The Servants of India Society,

250-612: A Certificate Course on Computer Applications in Economic Analysis. The institute offers a four-year undergraduate degree in Economics, encompassing forty-two courses. In addition to being a quantitative introduction to the discipline, the programme covers finance, management, accounting and sociology. It introduced its first batch in 2019. The institute publishes a quarterly journal of economics in English, Artha Vijnana ,

375-428: A broad range of subfields exists within finance. Asset- , money- , risk- and investment management aim to maximize value and minimize volatility . Financial analysis assesses the viability, stability, and profitability of an action or entity. Some fields are multidisciplinary, such as mathematical finance , financial law , financial economics , financial engineering and financial technology . These fields are

500-702: A definition of economics as a study of human behaviour, subject to and constrained by scarcity, which forces people to choose, allocate scarce resources to competing ends, and economise (seeking the greatest welfare while avoiding the wasting of scarce resources). According to Robbins: "Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses". Robbins' definition eventually became widely accepted by mainstream economists, and found its way into current textbooks. Although far from unanimous, most mainstream economists would accept some version of Robbins' definition, even though many have raised serious objections to

625-451: A distinct field. The book focused on determinants of national income in the short run when prices are relatively inflexible. Keynes attempted to explain in broad theoretical detail why high labour-market unemployment might not be self-correcting due to low " effective demand " and why even price flexibility and monetary policy might be unavailing. The term "revolutionary" has been applied to the book in its impact on economic analysis. During

750-418: A few hundred books which were published during the 18th and 19th centuries. Economics Economics ( / ˌ ɛ k ə ˈ n ɒ m ɪ k s , ˌ iː k ə -/ ) is a social science that studies the production , distribution , and consumption of goods and services . Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyses what

875-431: A high degree of computational complexity and are slow to converge to a solution on classical computers. In particular, when it comes to option pricing, there is additional complexity resulting from the need to respond to quickly changing markets. For example, in order to take advantage of inaccurately priced stock options, the computation must complete before the next change in the almost continuously changing stock market. As

1000-492: A loan or other debt obligations. The main areas of personal finance are considered to be income, spending, saving, investing, and protection. The following steps, as outlined by the Financial Planning Standards Board, suggest that an individual will understand a potentially secure personal finance plan after: Corporate finance deals with the actions that managers take to increase the value of

1125-738: A long-term strategic perspective regarding investment decisions that affect public entities. These long-term strategic periods typically encompass five or more years. Public finance is primarily concerned with: Central banks, such as the Federal Reserve System banks in the United States and the Bank of England in the United Kingdom , are strong players in public finance. They act as lenders of last resort as well as strong influences on monetary and credit conditions in

1250-420: A lower relative cost of production, rather relying only on its own production. It has been termed a "fundamental analytical explanation" for gains from trade . Coming at the end of the classical tradition, John Stuart Mill (1848) parted company with the earlier classical economists on the inevitability of the distribution of income produced by the market system. Mill pointed to a distinct difference between

1375-414: A mix of an art and science , and there are ongoing related efforts to organize a list of unsolved problems in finance . Managerial finance is the branch of finance that deals with the financial aspects of the management of a company, and the financial dimension of managerial decision-making more broadly. It provides the theoretical underpin for the practice described above , concerning itself with

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1500-449: A more comprehensive theory of costs on the supply side. In the 20th century, neoclassical theorists departed from an earlier idea that suggested measuring total utility for a society, opting instead for ordinal utility , which posits behaviour-based relations across individuals. In microeconomics , neoclassical economics represents incentives and costs as playing a pervasive role in shaping decision making . An immediate example of this

1625-467: A more important role in mainstream economic theory. Also, heterogeneity among the economic agents, e.g. differences in income, plays an increasing role in recent economic research. Other schools or trends of thought referring to a particular style of economics practised at and disseminated from well-defined groups of academicians that have become known worldwide, include the Freiburg School ,

1750-558: A mélange of old and new buildings. The campus consists of an academic block, faculty block, administration block, seminar hall and the Dhananjaya Rao Gadgil Library. There is a conference hall, known as Kale Memorial Hall, on the top floor of the library which is used by the institute and also let out to others on rent. On the Fergusson Hill behind the institute lies the spot where Gokhale took the vows of

1875-597: A proportion of the value their work had created. Marxian economics was further developed by Karl Kautsky (1854–1938)'s The Economic Doctrines of Karl Marx and The Class Struggle (Erfurt Program) , Rudolf Hilferding 's (1877–1941) Finance Capital , Vladimir Lenin (1870–1924)'s The Development of Capitalism in Russia and Imperialism, the Highest Stage of Capitalism , and Rosa Luxemburg (1871–1919)'s The Accumulation of Capital . At its inception as

2000-409: A rapidly growing population against a limited amount of land meant diminishing returns to labour. The result, he claimed, was chronically low wages, which prevented the standard of living for most of the population from rising above the subsistence level. Economist Julian Simon has criticised Malthus's conclusions. While Adam Smith emphasised production and income, David Ricardo (1817) focused on

2125-559: A registered body founded by the nationalist leader Gopal Krishna Gokhale , are the trustees of the institute. The institute is registered under the Societies Registration Act, 1860, and the Bombay Public Trusts Act, 1950. The institute was set up with an objective to conduct research on the economic and political problems of India and to train research workers in these disciplines. D. R. Gadgil

2250-447: A result, the finance community is always looking for ways to overcome the resulting performance issues that arise when pricing options. This has led to research that applies alternative computing techniques to finance. Most commonly used quantum financial models are quantum continuous model, quantum binomial model, multi-step quantum binomial model etc. The origin of finance can be traced to the beginning of state formation and trade during

2375-469: A set of stable preferences, a definite overall guiding objective, and the capability of making a choice. There exists an economic problem, subject to study by economic science, when a decision (choice) is made by one or more players to attain the best possible outcome. Keynesian economics derives from John Maynard Keynes , in particular his book The General Theory of Employment, Interest and Money (1936), which ushered in contemporary macroeconomics as

2500-409: A single tax on income of land owners. In reaction against copious mercantilist trade regulations, the physiocrats advocated a policy of laissez-faire , which called for minimal government intervention in the economy. Adam Smith (1723–1790) was an early economic theorist. Smith was harshly critical of the mercantilists but described the physiocratic system "with all its imperfections" as "perhaps

2625-452: A social science, economics was defined and discussed at length as the study of production, distribution, and consumption of wealth by Jean-Baptiste Say in his Treatise on Political Economy or, The Production, Distribution, and Consumption of Wealth (1803). These three items were considered only in relation to the increase or diminution of wealth, and not in reference to their processes of execution. Say's definition has survived in part up to

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2750-446: A sophisticated mathematical model is required, and thus overlaps several of the above. As a specialized practice area, quantitative finance comprises primarily three sub-disciplines; the underlying theory and techniques are discussed in the next section: DCF valuation formula widely applied in business and finance, since articulated in 1938 . Here, to get the value of the firm , its forecasted free cash flows are discounted to

2875-435: A sought after end). Some subsequent comments criticised the definition as overly broad in failing to limit its subject matter to analysis of markets. From the 1960s, however, such comments abated as the economic theory of maximizing behaviour and rational-choice modelling expanded the domain of the subject to areas previously treated in other fields. There are other criticisms as well, such as in scarcity not accounting for

3000-442: A synthesis emerged by the 2000s, often given the name the new neoclassical synthesis . It integrated the rational expectations and optimizing framework of the new classical theory with a new Keynesian role for nominal rigidities and other market imperfections like imperfect information in goods, labour and credit markets. The monetarist importance of monetary policy in stabilizing the economy and in particular controlling inflation

3125-398: A well-diversified portfolio, achieved investment performance will, in general, largely be a function of the asset mix selected, while the individual securities are less impactful. The specific approach or philosophy will also be significant, depending on the extent to which it is complementary with the market cycle . Risk management here is discussed immediately below. A quantitative fund

3250-712: Is a depository library of the publications of the United Nations and its agencies, the World Bank , the European Economic Community , the International Monetary Fund , and the government of Canada . The library possesses quite a large number of rare books published before the advent of twentieth century and which may not be available elsewhere. The oldest book in the library dates back to 1680. Besides, there are quite

3375-421: Is a term for the "way (nomos) to run a household (oikos)", or in other words the know-how of an οἰκονομικός ( oikonomikos ), or "household or homestead manager". Derived terms such as "economy" can therefore often mean "frugal" or "thrifty". By extension then, "political economy" was the way to manage a polis or state. There are a variety of modern definitions of economics ; some reflect evolving views of

3500-482: Is about performing valuation and asset allocation today, based on the risk and uncertainty of future outcomes while appropriately incorporating the time value of money . Determining the present value of these future values, "discounting", must be at the risk-appropriate discount rate , in turn, a major focus of finance-theory. As financial theory has roots in many disciplines, including mathematics, statistics, economics, physics, and psychology, it can be considered

3625-438: Is also applied to such diverse subjects as crime , education , the family , feminism , law , philosophy , politics , religion , social institutions , war , science , and the environment . The earlier term for the discipline was "political economy", but since the late 19th century, it has commonly been called "economics". The term is ultimately derived from Ancient Greek οἰκονομία ( oikonomia ) which

3750-582: Is expected to shape scholars interested in population, public health and health economics . M.A. (Economics) This programme is designed for careers in different public services and to give advanced level knowledge in microeconomics and macroeconomics Additionally this programme includes courses pertaining public economics, monetary microeconomics, basic econometrics, international relations, Indian polity, environmental and resource economics. This programme offers edge to students in economics services. M.Sc. Economics (Public Policy) The institute also offers

3875-436: Is managed using computer-based mathematical techniques (increasingly, machine learning ) instead of human judgment. The actual trading is typically automated via sophisticated algorithms . Risk management , in general, is the study of how to control risks and balance the possibility of gains; it is the process of measuring risk and then developing and implementing strategies to manage that risk. Financial risk management

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4000-444: Is mathematics that is actually important in this new scenario Finance theory is heavily based on financial instrument pricing such as stock option pricing. Many of the problems facing the finance community have no known analytical solution. As a result, numerical methods and computer simulations for solving these problems have proliferated. This research area is known as computational finance . Many computational finance problems have

4125-657: Is often indirect, through a financial intermediary such as a bank , or via the purchase of notes or bonds ( corporate bonds , government bonds , or mutual bonds) in the bond market . The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary earns the difference for arranging the loan. A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity. Investing typically entails

4250-413: Is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it

4375-483: Is published under the Kale Memorial Lecture Series. Over 70 lectures have been delivered under this Lecture Series, and the list of speakers includes such prominent figures as: B R Ambedkar , John Mathai , P C Mahalanobis , V.K.R.V. Rao , K N Raj , V M Dandekar , I G Patel , Andre Beteille , Manmohan Singh , Amresh Bagchi , Jagdish Bhagwati , C Rangarajan and A P J Abdul Kalam . All

4500-497: Is referred to as "wholesale finance". Institutions here extend the products offered , with related trading, to include bespoke options , swaps , and structured products , as well as specialized financing ; this " financial engineering " is inherently mathematical , and these institutions are then the major employers of "quants" (see below ). In these institutions, risk management , regulatory capital , and compliance play major roles. As outlined, finance comprises, broadly,

4625-598: Is the consumer theory of individual demand, which isolates how prices (as costs) and income affect quantity demanded. In macroeconomics it is reflected in an early and lasting neoclassical synthesis with Keynesian macroeconomics. Neoclassical economics is occasionally referred as orthodox economics whether by its critics or sympathisers. Modern mainstream economics builds on neoclassical economics but with many refinements that either supplement or generalise earlier analysis, such as econometrics , game theory , analysis of market failure and imperfect competition , and

4750-471: Is the branch of economics that studies the interrelation of financial variables , such as prices , interest rates and shares, as opposed to real economic variables, i.e. goods and services . It thus centers on pricing, decision making, and risk management in the financial markets , and produces many of the commonly employed financial models . ( Financial econometrics is the branch of financial economics that uses econometric techniques to parameterize

4875-485: Is the practice of protecting corporate value against financial risks , often by "hedging" exposure to these using financial instruments. The focus is particularly on credit and market risk, and in banks, through regulatory capital, includes operational risk. Financial risk management is related to corporate finance in two ways. Firstly, firm exposure to market risk is a direct result of previous capital investments and funding decisions; while credit risk arises from

5000-400: Is then often referred to as "business finance". Typically, "corporate finance" relates to the long term objective of maximizing the value of the entity's assets , its stock , and its return to shareholders , while also balancing risk and profitability . This entails three primary areas: The latter creates the link with investment banking and securities trading , as above, in that

5125-607: Is viewed as basic elements within economies , including individual agents and markets , their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyses economies as systems where production, distribution, consumption, savings , and investment expenditure interact, and factors affecting it: factors of production , such as labour , capital , land , and enterprise , inflation , economic growth , and public policies that have impact on these elements . It also seeks to analyse and describe

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5250-665: The Bronze Age . The earliest historical evidence of finance is dated to around 3000 BCE. Banking originated in West Asia, where temples and palaces were used as safe places for the storage of valuables. Initially, the only valuable that could be deposited was grain, but cattle and precious materials were eventually included. During the same period, the Sumerian city of Uruk in Mesopotamia supported trade by lending as well as

5375-780: The School of Lausanne , the Stockholm school and the Chicago school of economics . During the 1970s and 1980s mainstream economics was sometimes separated into the Saltwater approach of those universities along the Eastern and Western coasts of the US, and the Freshwater, or Chicago school approach. Within macroeconomics there is, in general order of their historical appearance in

5500-512: The government of India , on recommendation of the University Grants Commission, declared GIPE as ‘ Deemed University ’ from 9 May 1993. The goal of the institute – to conduct research into the economic and political problems of India and train research workers in these subjects – has been reconceptualised over years so as to confine the activities of the institute to teaching and research in economics alone, leaving aside

5625-433: The macroeconomics of high unemployment. Gary Becker , a contributor to the expansion of economics into new areas, described the approach he favoured as "combin[ing the] assumptions of maximizing behaviour, stable preferences , and market equilibrium , used relentlessly and unflinchingly." One commentary characterises the remark as making economics an approach rather than a subject matter but with great specificity as to

5750-446: The managerial application of the various finance techniques . Academics working in this area are typically based in business school finance departments, in accounting , or in management science . The tools addressed and developed relate in the main to managerial accounting and corporate finance : the former allow management to better understand, and hence act on, financial information relating to profitability and performance;

5875-467: The neoclassical model of economic growth for analysing long-run variables affecting national income . Neoclassical economics studies the behaviour of individuals , households , and organisations (called economic actors, players, or agents), when they manage or use scarce resources, which have alternative uses, to achieve desired ends. Agents are assumed to act rationally, have multiple desirable ends in sight, limited resources to obtain these ends,

6000-724: The numerical methods applied here. Experimental finance aims to establish different market settings and environments to experimentally observe and provide a lens through which science can analyze agents' behavior and the resulting characteristics of trading flows, information diffusion, and aggregation, price setting mechanisms, and returns processes. Researchers in experimental finance can study to what extent existing financial economics theory makes valid predictions and therefore prove them, as well as attempt to discover new principles on which such theory can be extended and be applied to future financial decisions. Research may proceed by conducting trading simulations or by establishing and studying

6125-415: The societal to the microeconomic level: Economics is a study of man in the ordinary business of life. It enquires how he gets his income and how he uses it. Thus, it is on the one side, the study of wealth and on the other and more important side, a part of the study of man. Lionel Robbins (1932) developed implications of what has been termed "[p]erhaps the most commonly accepted current definition of

6250-400: The "choice process and the type of social interaction that [such] analysis involves." The same source reviews a range of definitions included in principles of economics textbooks and concludes that the lack of agreement need not affect the subject-matter that the texts treat. Among economists more generally, it argues that a particular definition presented may reflect the direction toward which

6375-486: The 1970s and 1980s, when several major central banks followed a monetarist-inspired policy, but was later abandoned because the results were unsatisfactory. A more fundamental challenge to the prevailing Keynesian paradigm came in the 1970s from new classical economists like Robert Lucas , Thomas Sargent and Edward Prescott . They introduced the notion of rational expectations in economics, which had profound implications for many economic discussions, among which were

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6500-729: The Kale Memorial Lectures delivered at the Gokhale Institute are published, and most of the Lectures' Text can be found on JSTOR . This is a List of Kale Memorial Lectures held at Gokhale Institute of Politics and Economics since 1937. The institute has a campus of 5.25 acres (21,200 m), located in the urban setting of Pune , in the Deccan Gymkhana area. The residential campus of the institute comprising faculty and staff houses, guest houses, and

6625-588: The Servants of India Society – poverty, obedience, and service to nation – and administered them to three others. It has become a landmark because of the erection of a column there. Gokhale's bungalow still stands in the precincts of the campus. A massive and graceful banyan tree adds to the charm of the place. This is said to be the tree under which Gopal Krishna Gokhale and Mahatma Gandhi (who regarded Gokhale as his political guru) used to muse over political issues in their times. The Dhananjaya Rao Gadgil Library

6750-478: The above " Fundamental theorem of asset pricing ". The subject has a close relationship with financial economics, which, as outlined, is concerned with much of the underlying theory that is involved in financial mathematics: generally, financial mathematics will derive and extend the mathematical models suggested. Computational finance is the branch of (applied) computer science that deals with problems of practical interest in finance, and especially emphasizes

6875-407: The analysis of wealth: how wealth is created (production), distributed, and consumed; and how wealth can grow. But he said that economics can be used to study other things, such as war, that are outside its usual focus. This is because war has as the goal winning it (as a sought after end ), generates both cost and benefits; and, resources (human life and other costs) are used to attain the goal. If

7000-479: The area of inquiry or object of inquiry rather than the methodology. In the biology department, it is not said that all biology should be studied with DNA analysis. People study living organisms in many different ways, so some people will perform DNA analysis, others might analyse anatomy, and still others might build game theoretic models of animal behaviour. But they are all called biology because they all study living organisms. According to Ha Joon Chang, this view that

7125-443: The author believes economics is evolving, or should evolve. Many economists including nobel prize winners James M. Buchanan and Ronald Coase reject the method-based definition of Robbins and continue to prefer definitions like those of Say, in terms of its subject matter. Ha-Joon Chang has for example argued that the definition of Robbins would make economics very peculiar because all other sciences define themselves in terms of

7250-501: The behavior of people in artificial, competitive, market-like settings. Behavioral finance studies how the psychology of investors or managers affects financial decisions and markets and is relevant when making a decision that can impact either negatively or positively on one of their areas. With more in-depth research into behavioral finance, it is possible to bridge what actually happens in financial markets with analysis based on financial theory. Behavioral finance has grown over

7375-579: The business's credit policy and is often addressed through credit insurance and provisioning . Secondly, both disciplines share the goal of enhancing or at least preserving, the firm's economic value , and in this context overlaps also enterprise risk management , typically the domain of strategic management . Here, businesses devote much time and effort to forecasting , analytics and performance monitoring . (See ALM and treasury management .) For banks and other wholesale institutions, risk management focuses on managing, and as necessary hedging,

7500-891: The capital raised will generically comprise debt, i.e. corporate bonds , and equity , often listed shares . Re risk management within corporates, see below . Financial managers—i.e. as distinct from corporate financiers—focus more on the short term elements of profitability, cash flow, and " working capital management " ( inventory , credit and debtors ), ensuring that the firm can safely and profitably carry out its financial and operational objectives; i.e. that it: (1) can service both maturing short-term debt repayments, and scheduled long-term debt payments, and (2) has sufficient cash flow for ongoing and upcoming operational expenses . (See Financial management and Financial planning and analysis .) Public finance describes finance as related to sovereign states, sub-national entities, and related public entities or agencies. It generally encompasses

7625-517: The colonies. Physiocrats , a group of 18th-century French thinkers and writers, developed the idea of the economy as a circular flow of income and output. Physiocrats believed that only agricultural production generated a clear surplus over cost, so that agriculture was the basis of all wealth. Thus, they opposed the mercantilist policy of promoting manufacturing and trade at the expense of agriculture, including import tariffs. Physiocrats advocated replacing administratively costly tax collections with

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7750-505: The courses are as follows: The master's degree programme in Financial Economics is distinct from the conventional finance programmes, notably on account of its emphasis on the three-way linkage between macroeconomics , financial markets and financial regulations. Inputs in quantitative finance in the form of compulsory courses in Financial Economics, Computational Finance and Financial Engineering are important highlights of

7875-468: The courses more rigorous. The PhD programme, started right from the inception of the institute, still continues with a highly selective intake and hence a limited output. More than 165 students have obtained their doctoral degrees in different branches of economics since the inception of the institute. GIPE offers two-year M.Sc. programmes in Economics, Financial Economics, Agri-Business Economics and International Business Economics & Finance. Details of

8000-488: The design of modern monetary policy and are now standard workhorses in most central banks. After the 2007–2008 financial crisis , macroeconomic research has put greater emphasis on understanding and integrating the financial system into models of the general economy and shedding light on the ways in which problems in the financial sector can turn into major macroeconomic recessions. In this and other research branches, inspiration from behavioural economics has started playing

8125-506: The distribution of income among landowners, workers, and capitalists. Ricardo saw an inherent conflict between landowners on the one hand and labour and capital on the other. He posited that the growth of population and capital, pressing against a fixed supply of land, pushes up rents and holds down wages and profits. Ricardo was also the first to state and prove the principle of comparative advantage , according to which each country should specialise in producing and exporting goods in that it has

8250-514: The early fifties, the Rockefeller Foundation made a substantial grant, spread over years, for the conduct of a research programme in rural demography . The Union Ministry of Health also gave grants for conducting some specific demographic studies in 1954–57; and in 1964, the ministry decided to strengthen and expand the research work on population by financing on a continuing basis a Population Research Centre as an integral part of

8375-469: The economy can and should be studied in only one way (for example by studying only rational choices), and going even one step further and basically redefining economics as a theory of everything, is peculiar. Questions regarding distribution of resources are found throughout the writings of the Boeotian poet Hesiod and several economic historians have described Hesiod as the "first economist". However,

8500-461: The economy. Development finance , which is related, concerns investment in economic development projects provided by a (quasi) governmental institution on a non-commercial basis; these projects would otherwise not be able to get financing . A public–private partnership is primarily used for infrastructure projects: a private sector corporate provides the financing up-front, and then draws profits from taxpayers or users. Climate finance , and

8625-672: The excess, intending to earn a fair return. Correspondingly, an entity where income is less than expenditure can raise capital usually in one of two ways: (i) by borrowing in the form of a loan (private individuals), or by selling government or corporate bonds ; (ii) by a corporation selling equity , also called stock or shares (which may take various forms: preferred stock or common stock ). The owners of both bonds and stock may be institutional investors —financial institutions such as investment banks and pension funds —or private individuals, called private investors or retail investors. (See Financial market participants .) The lending

8750-510: The field is referred to as quantitative finance and / or mathematical finance, and comprises primarily the three areas discussed. The main mathematical tools and techniques are, correspondingly: Mathematically, these separate into two analytic branches : derivatives pricing uses risk-neutral probability (or arbitrage-pricing probability), denoted by "Q"; while risk and portfolio management generally use physical (or actual or actuarial) probability, denoted by "P". These are interrelated through

8875-416: The field. Quantum finance is an interdisciplinary field, in which theories and methods developed by quantum physicists and economists are applied to solve financial problems. It represents a branch known as econophysics. Although quantum computational methods have been around for quite some time and use the basic principles of physics to better understand the ways to implement and manage cash flows, it

9000-410: The firm to the shareholders, the sources of funding and the capital structure of corporations, and the tools and analysis used to allocate financial resources. While corporate finance is in principle different from managerial finance , which studies the financial management of all firms rather than corporations alone, the concepts are applicable to the financial problems of all firms, and this area

9125-751: The first large-scale macroeconometric model , applying the Keynesian thinking systematically to the US economy . Immediately after World War II, Keynesian was the dominant economic view of the United States establishment and its allies, Marxian economics was the dominant economic view of the Soviet Union nomenklatura and its allies. Monetarism appeared in the 1950s and 1960s, its intellectual leader being Milton Friedman . Monetarists contended that monetary policy and other monetary shocks, as represented by

9250-570: The first publication of which was made in March 1959. This journal publishes results of research work carried out in the Institute as well as works of scholars from outside the institute after a refereeing process. The institute also publishes research works in the form of books and mimeograph series. The Kale Memorial Lecture, organised by the institute every year on the occasion of the Founder's Day,

9375-451: The first scholarly work in this area. The field is largely focused on the modeling of derivatives —with much emphasis on interest rate- and credit risk modeling —while other important areas include insurance mathematics and quantitative portfolio management . Relatedly, the techniques developed are applied to pricing and hedging a wide range of asset-backed , government , and corporate -securities. As above , in terms of practice,

9500-627: The flows of capital that take place between individuals and households ( personal finance ), governments ( public finance ), and businesses ( corporate finance ). "Finance" thus studies the process of channeling money from savers and investors to entities that need it. Savers and investors have money available which could earn interest or dividends if put to productive use. Individuals, companies and governments must obtain money from some external source, such as loans or credit, when they lack sufficient funds to run their operations. In general, an entity whose income exceeds its expenditure can lend or invest

9625-540: The following decades, many economists followed Keynes' ideas and expanded on his works. John Hicks and Alvin Hansen developed the IS–LM model which was a simple formalisation of some of Keynes' insights on the economy's short-run equilibrium. Franco Modigliani and James Tobin developed important theories of private consumption and investment , respectively, two major components of aggregate demand . Lawrence Klein built

9750-400: The foundation of business and accounting . In some cases, theories in finance can be tested using the scientific method , covered by experimental finance . The early history of finance parallels the early history of money , which is prehistoric . Ancient and medieval civilizations incorporated basic functions of finance, such as banking, trading and accounting, into their economies. In

9875-712: The fundamental risk mitigant here, investment managers will apply various hedging techniques as appropriate, these may relate to the portfolio as a whole or to individual stocks . Bond portfolios are often (instead) managed via cash flow matching or immunization , while for derivative portfolios and positions, traders use "the Greeks" to measure and then offset sensitivities. In parallel, managers — active and passive — will monitor tracking error , thereby minimizing and preempting any underperformance vs their "benchmark" . Quantitative finance—also referred to as "mathematical finance"—includes those finance activities where

10000-509: The global economy . Other broad distinctions within economics include those between positive economics , describing "what is", and normative economics , advocating "what ought to be"; between economic theory and applied economics ; between rational and behavioural economics ; and between mainstream economics and heterodox economics . Economic analysis can be applied throughout society, including business , finance , cybersecurity , health care , engineering and government . It

10125-424: The growth in the money stock, was an important cause of economic fluctuations, and consequently that monetary policy was more important than fiscal policy for purposes of stabilisation . Friedman was also skeptical about the ability of central banks to conduct a sensible active monetary policy in practice, advocating instead using simple rules such as a steady rate of money growth. Monetarism rose to prominence in

10250-506: The heart of investment management is asset allocation — diversifying the exposure among these asset classes , and among individual securities within each asset class—as appropriate to the client's investment policy , in turn, a function of risk profile, investment goals, and investment horizon (see Investor profile ). Here: Overlaid is the portfolio manager's investment style —broadly, active vs passive , value vs growth , and small cap vs. large cap —and investment strategy . In

10375-463: The importance of various market failures for the functioning of the economy, as had Keynes. Not least, they proposed various reasons that potentially explained the empirically observed features of price and wage rigidity , usually made to be endogenous features of the models, rather than simply assumed as in older Keynesian-style ones. After decades of often heated discussions between Keynesians, monetarists, new classical and new Keynesian economists,

10500-588: The institute as a Centre of Advanced Study in Agricultural Economics to start with and later, in 1964, as a Centre of Advanced Study in Economics. In 1977, the UGC, as a part of its Area Studies Programme, established at the Institute a Centre of Study of Economics of East European Countries. In the same year, the Reserve Bank of India instituted a chair in finance at the institute. Although GIPE

10625-618: The institute. Ford Foundation gave a very generous financial assistance for more than a decade beginning with the year 1956. Later on, the Ford Foundation, in co-operation with the Planning Commission , provided a separate grant for research and training in the areas of planning and development, mainly devoted to input–output studies. In 1962, the University Grants Commission (UGC) recognised

10750-444: The last few decades to become an integral aspect of finance. Behavioral finance includes such topics as: A strand of behavioral finance has been dubbed quantitative behavioral finance , which uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Quantum finance involves applying quantum mechanical approaches to financial theory, providing novel methods and perspectives in

10875-423: The late 19th century, the global financial system was formed. In the middle of the 20th century, finance emerged as a distinct academic discipline, separate from economics. The earliest doctoral programs in finance were established in the 1960s and 1970s. Today, finance is also widely studied through career -focused undergraduate and master's level programs. As outlined, the financial system consists of

11000-427: The latter, as above, are about optimizing the overall financial structure, including its impact on working capital. Key aspects of managerial finance thus include: The discussion, however, extends to business strategy more broadly, emphasizing alignment with the company's overall strategic objectives; and similarly incorporates the managerial perspectives of planning, directing, and controlling. Financial economics

11125-616: The literature; classical economics , neoclassical economics , Keynesian economics , the neoclassical synthesis , monetarism , new classical economics , New Keynesian economics and the new neoclassical synthesis . Finance In these financial systems, assets are bought, sold, or traded as financial instruments , such as currencies , loans , bonds , shares , stocks , options , futures , etc. Assets can also be banked , invested , and insured to maximize value and minimize loss. In practice, risks are always present in any financial action and entities. Due to its wide scope,

11250-449: The market's two roles: allocation of resources and distribution of income. The market might be efficient in allocating resources but not in distributing income, he wrote, making it necessary for society to intervene. Value theory was important in classical theory. Smith wrote that the "real price of every thing ... is the toil and trouble of acquiring it". Smith maintained that, with rent and profit, other costs besides wages also enter

11375-437: The most famous passages in all economics," Smith represents every individual as trying to employ any capital they might command for their own advantage, not that of the society, and for the sake of profit, which is necessary at some level for employing capital in domestic industry, and positively related to the value of produce. In this: He generally, indeed, neither intends to promote the public interest, nor knows how much he

11500-503: The pessimistic analysis of Malthus (1798). John Stuart Mill (1844) delimited the subject matter further: The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object. Alfred Marshall provided a still widely cited definition in his textbook Principles of Economics (1890) that extended analysis beyond wealth and from

11625-480: The political problems of India. However, the applied and empirical research into Indian economic problems and policy evaluations indirectly encompass the political dimensions as well. The curricular content of the ongoing MSc Economics programme offers a blend of core and applied optional courses. The number of subjects per course have been increased from 16 in the MA programme to 20 in the ongoing MSc programme so as to make

11750-444: The present using the weighted average cost of capital for the discount factor. For share valuation investors use the related dividend discount model . Financial theory is studied and developed within the disciplines of management , (financial) economics , accountancy and applied mathematics . Abstractly, finance is concerned with the investment and deployment of assets and liabilities over "space and time"; i.e., it

11875-487: The present, modified by substituting the word "wealth" for "goods and services" meaning that wealth may include non-material objects as well. One hundred and thirty years later, Lionel Robbins noticed that this definition no longer sufficed, because many economists were making theoretical and philosophical inroads in other areas of human activity. In his Essay on the Nature and Significance of Economic Science , he proposed

12000-409: The price of a commodity. Other classical economists presented variations on Smith, termed the ' labour theory of value '. Classical economics focused on the tendency of any market economy to settle in a final stationary state made up of a constant stock of physical wealth (capital) and a constant population size . Marxist (later, Marxian) economics descends from classical economics and it derives from

12125-429: The program has three major modules: an economics module, a management module, and an agribusiness module. This new programme to be offered from the academic year 2016-17 is a unique course designed for careers in international trade, foreign portfolio investment, foreign direct investment, international technical/financial collaboration and joint ventures, international finance and portfolio management, etc. This program

12250-418: The programme. In addition, the programme provides for full length courses on Project Appraisal & Finance, Structural Products, M&A, and Investment Banking among others. The M.Sc. Agribusiness Economics program prepares students for careers in the agribusiness sector, both as officers in agribusiness organizations, and as economists in agribusiness related research organizations. The academic content of

12375-409: The purchase of stock , either individual securities or via a mutual fund , for example. Stocks are usually sold by corporations to investors so as to raise required capital in the form of " equity financing ", as distinct from the debt financing described above. The financial intermediaries here are the investment banks . The investment banks find the initial investors and facilitate the listing of

12500-429: The purest approximation to the truth that has yet been published" on the subject. The publication of Adam Smith 's The Wealth of Nations in 1776, has been described as "the effective birth of economics as a separate discipline." The book identified land, labour, and capital as the three factors of production and the major contributors to a nation's wealth, as distinct from the physiocratic idea that only agriculture

12625-749: The rate of 20 percent per year. By 1200 BCE, cowrie shells were used as a form of money in China . The use of coins as a means of representing money began in the years between 700 and 500 BCE. Herodotus mentions the use of crude coins in Lydia around 687 BCE and, by 640 BCE, the Lydians had started to use coin money more widely and opened permanent retail shops. Shortly after, cities in Classical Greece , such as Aegina , Athens , and Corinth , started minting their own coins between 595 and 570 BCE. During

12750-724: The related Environmental finance , address the financial strategies, resources and instruments used in climate change mitigation . Investment management is the professional asset management of various securities—typically shares and bonds, but also other assets, such as real estate, commodities and alternative investments —in order to meet specified investment goals for the benefit of investors. As above, investors may be institutions, such as insurance companies, pension funds, corporations, charities, educational establishments, or private investors, either directly via investment contracts or, more commonly, via collective investment schemes like mutual funds, exchange-traded funds , or REITs . At

12875-413: The relationships suggested.) The discipline has two main areas of focus: asset pricing and corporate finance; the first being the perspective of providers of capital, i.e. investors, and the second of users of capital; respectively: Financial mathematics is the field of applied mathematics concerned with financial markets ; Louis Bachelier's doctoral thesis , defended in 1900, is considered to be

13000-412: The scope and method of economics, emanating from that definition. A body of theory later termed "neoclassical economics" formed from about 1870 to 1910. The term "economics" was popularised by such neoclassical economists as Alfred Marshall and Mary Paley Marshall as a concise synonym for "economic science" and a substitute for the earlier " political economy ". This corresponded to the influence on

13125-475: The securities, typically shares and bonds. Additionally, they facilitate the securities exchanges , which allow their trade thereafter, as well as the various service providers which manage the performance or risk of these investments. These latter include mutual funds , pension funds , wealth managers , and stock brokers , typically servicing retail investors (private individuals). Inter-institutional trade and investment, and fund-management at this scale ,

13250-486: The so-called Lucas critique and the presentation of real business cycle models . During the 1980s, a group of researchers appeared being called New Keynesian economists , including among others George Akerlof , Janet Yellen , Gregory Mankiw and Olivier Blanchard . They adopted the principle of rational expectations and other monetarist or new classical ideas such as building upon models employing micro foundations and optimizing behaviour, but simultaneously emphasised

13375-444: The source of the word economy. Joseph Schumpeter described 16th and 17th century scholastic writers, including Tomás de Mercado , Luis de Molina , and Juan de Lugo , as "coming nearer than any other group to being the 'founders' of scientific economics" as to monetary , interest , and value theory within a natural-law perspective. Two groups, who later were called "mercantilists" and "physiocrats", more directly influenced

13500-406: The state or commonwealth with a revenue for the publick services. Jean-Baptiste Say (1803), distinguishing the subject matter from its public-policy uses, defined it as the science of production, distribution, and consumption of wealth . On the satirical side, Thomas Carlyle (1849) coined " the dismal science " as an epithet for classical economics , in this context, commonly linked to

13625-399: The student dormitories, is built on a separate plot of 5.39 acres (21,800 m), a few metres away from the institute. There are two hostels, one for boys and another for girls. Adequate hostel accommodation is available for the existing students. The girls’ hostel was designed by the famous architect and urban planner Christopher Charles Benninger during 1996–1998. The institute campus is

13750-627: The study of economics of East European countries. In the early years, the research activities were financed through assistance from various ministries and public funding agencies including the government of Maharashtra and private foundations like the Sir Dorabji Tata Trust . In 1954, the Union Ministry of Food and Agriculture established the Agro-Economic Research Centre of the institute. During

13875-408: The subject of mathematical methods used in the natural sciences . Neoclassical economics systematically integrated supply and demand as joint determinants of both price and quantity in market equilibrium, influencing the allocation of output and income distribution. It rejected the classical economics' labour theory of value in favour of a marginal utility theory of value on the demand side and

14000-402: The subject or different views among economists. Scottish philosopher Adam Smith (1776) defined what was then called political economy as "an inquiry into the nature and causes of the wealth of nations", in particular as: a branch of the science of a statesman or legislator [with the twofold objectives of providing] a plentiful revenue or subsistence for the people ... [and] to supply

14125-471: The subject": Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. Robbins described the definition as not classificatory in "pick[ing] out certain kinds of behaviour" but rather analytical in "focus[ing] attention on a particular aspect of behaviour, the form imposed by the influence of scarcity ." He affirmed that previous economists have usually centred their studies on

14250-826: The subsequent development of the subject. Both groups were associated with the rise of economic nationalism and modern capitalism in Europe. Mercantilism was an economic doctrine that flourished from the 16th to 18th century in a prolific pamphlet literature, whether of merchants or statesmen. It held that a nation's wealth depended on its accumulation of gold and silver. Nations without access to mines could obtain gold and silver from trade only by selling goods abroad and restricting imports other than of gold and silver. The doctrine called for importing inexpensive raw materials to be used in manufacturing goods, which could be exported, and for state regulation to impose protective tariffs on foreign manufactured goods and prohibit manufacturing in

14375-623: The three areas of personal finance, corporate finance, and public finance. These, in turn, overlap and employ various activities and sub-disciplines—chiefly investments , risk management, and quantitative finance . Personal finance refers to the practice of budgeting to ensure enough funds are available to meet basic needs, while ensuring there is only a reasonable level of risk to lose said capital. Personal finance may involve paying for education, financing durable goods such as real estate and cars, buying insurance , investing, and saving for retirement . Personal finance may also involve paying for

14500-446: The use of interest. In Sumerian, "interest" was mas , which translates to "calf". In Greece and Egypt, the words used for interest, tokos and ms respectively, meant "to give birth". In these cultures, interest indicated a valuable increase, and seemed to consider it from the lender's point of view. The Code of Hammurabi (1792–1750 BCE) included laws governing banking operations. The Babylonians were accustomed to charging interest at

14625-635: The various positions held by the institution—both trading positions and long term exposures —and on calculating and monitoring the resultant economic capital , and regulatory capital under Basel III . The calculations here are mathematically sophisticated, and within the domain of quantitative finance as below. Credit risk is inherent in the business of banking, but additionally, these institutions are exposed to counterparty credit risk . Banks typically employ Middle office "Risk Groups" , whereas front office risk teams provide risk "services" (or "solutions") to customers. Additional to diversification ,

14750-467: The war is not winnable or if the expected costs outweigh the benefits, the deciding actors (assuming they are rational) may never go to war (a decision ) but rather explore other alternatives. Economics cannot be defined as the science that studies wealth, war, crime, education, and any other field economic analysis can be applied to; but, as the science that studies a particular common aspect of each of those subjects (they all use scarce resources to attain

14875-515: The word Oikos , the Greek word from which the word economy derives, was used for issues regarding how to manage a household (which was understood to be the landowner, his family, and his slaves ) rather than to refer to some normative societal system of distribution of resources, which is a more recent phenomenon. Xenophon , the author of the Oeconomicus , is credited by philologues for being

15000-460: The work of Karl Marx . The first volume of Marx's major work, Das Kapital , was published in 1867. Marx focused on the labour theory of value and theory of surplus value . Marx wrote that they were mechanisms used by capital to exploit labour. The labour theory of value held that the value of an exchanged commodity was determined by the labour that went into its production, and the theory of surplus value demonstrated how workers were only paid

15125-421: Was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. The Reverend Thomas Robert Malthus (1798) used the concept of diminishing returns to explain low living standards. Human population , he argued, tended to increase geometrically, outstripping the production of food, which increased arithmetically. The force of

15250-588: Was primarily a research institute, it was recognised as an institution for higher learning in the field of economics, and it awarded MA , MPhil and PhD degrees in Economics under recognition from the University of Bombay from 1930 to 1949. With the establishment of the University of Pune in 1949, GIPE became a constituent recognised institution of the University of Pune until 1993. Keeping in view its professional standing and scope for further development,

15375-892: Was productive. Smith discusses potential benefits of specialisation by division of labour , including increased labour productivity and gains from trade , whether between town and country or across countries. His "theorem" that "the division of labor is limited by the extent of the market" has been described as the "core of a theory of the functions of firm and industry " and a "fundamental principle of economic organization." To Smith has also been ascribed "the most important substantive proposition in all of economics" and foundation of resource-allocation theory—that, under competition , resource owners (of labour, land, and capital) seek their most profitable uses, resulting in an equal rate of return for all uses in equilibrium (adjusted for apparent differences arising from such factors as training and unemployment). In an argument that includes "one of

15500-437: Was recognised as well as the traditional Keynesian insistence that fiscal policy could also play an influential role in affecting aggregate demand . Methodologically, the synthesis led to a new class of applied models, known as dynamic stochastic general equilibrium or DSGE models, descending from real business cycles models, but extended with several new Keynesian and other features. These models proved useful and influential in

15625-460: Was the first director of the institute. It was named a deemed university in 1993. The major research areas of the institute, developed over the years through financial assistance from various sources, are agricultural economics , population studies , economic history , input–output analysis for planning and development, microeconomics , macroeconomics , monetary economics , financial economics , public economics , international economics and

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