# ADVANCED MACROECONOMICS 1 - 2022/3

Module code: ECOM060

## Module Overview

This Course gives the students a systematic way of thinking about macroeconomic issues and will cover the basic tools needed to study dynamic macroeconomic models; namely the solution and stability analysis of linearized models and dynamic programming. These tools will then be used to study macroeconomic theories of the business cycle and to address monetary and fiscal policy questions. Specifically, the Course will study the construction of a rich New Keynesian model in steps, progressing from a Real Business Cycle set-up. The use of software packages Matlab and Dynare will be taught to carry out the numerical solution and simulation of the models. Numerical computation will be complemented by pen-and-paper analysis of tractable simpler models. The ultimate aim is to use this combination of tractable and numerically solved models to first, understand how to avoid macroeconomic instability; second, to understand the volatility, co-movement and persistence seen in macroeconomic data and finally to understand their implications for monetary and fiscal policy.

### Module provider

Economics

ZARETSKI Aliaksandr (Economics)

## Overall student workload

Independent Learning Hours: 117

Lecture Hours: 33

Semester 1

None.

## Module content

Indicative content includes:

• Deterministic Difference Equations

• Stochastic Difference Equations

• Introduction to Matlab and programming in Dynare

• Dynamic Programming in a linear-quadratic framework

• Neoclassical Growth Models and different market structures

• The Real Business Cycle (RBC) Model

• Fiscal Policy using the RBC Model

• The New Keynesian (NK) Model: Sticky Prices and Sticky Wages

• Optimal Monetary Policy in the NK model

## Assessment pattern

Assessment type Unit of assessment Weighting
Coursework Coursework - Take home problem set 1 15
Coursework Coursework - Take home problem set 2 15
Examination Final Examination 70

None.

## Assessment Strategy

The assessment strategy is designed to provide students with the opportunity to demonstrate their technical skills relating to, and understanding of, economic problems involving game theory.

Thus, the summative assessment for this module consists of:

• 3 ‘take home’ problem sets

• A three-hour exam worth 70% of the final mark.

Formative assessment

Informal discussions during and outside of lectures.

Feedback

Students will receive verbal feedback during the lectures through direct interaction. Moreover, they will receive their problems sets back with written comments.

## Module aims

• • Provide students with a thorough understanding of key macroeconomics models, concepts and results.
• • Enable students to prepare for research in this field.
• • Enable students to develop the skills to work independently.

## Learning outcomes

 Attributes Developed 001 To develop the understanding of macroeconomic theory and the theory of macroeconomic policy at a level approriate for the pursuit of a research career (ie. PhD in Economics, work in Central Banks or Investment Banks) (C,K) KC 002 Understand and interpret economic models based on rational inter-temporal optimizing behaviour of all agents (C,K,T,P) KCPT 003 Introduction to solving and simulating DSGE models using Matlab and Dynare, and use them for policy analysis (C,K,T,P) KCPT 004 Read and interpret state-of-the-art papers and books related to the material covered (K,T) KT 005 Apply the concepts, tools and results to economic problems (C,K,P) KCP

Attributes Developed

C - Cognitive/analytical

K - Subject knowledge

T - Transferable skills

P - Professional/Practical skills

## Methods of Teaching / Learning

The learning and teaching strategy is designed to:

develop students’ independent research skills, by training them to do critical analysis of papers in scientific journals and do 'take home' problem sets, making sure concepts and methods are mastered.

The learning and teaching methods include:

3 hours lecture per week for 11 weeks. The first two hours are devoted to standard teaching and focus on quantitative methods and theory. The last hour will instead be focusing on practical application and problem solving with a high interactive content.

Indicated Lecture Hours (which may also include seminars, tutorials, workshops and other contact time) are approximate and may include in-class tests where one or more of these are an assessment on the module. In-class tests are scheduled/organised separately to taught content and will be published on to student personal timetables, where they apply to taken modules, as soon as they are finalised by central administration. This will usually be after the initial publication of the teaching timetable for the relevant semester.

Upon accessing the reading list, please search for the module using the module code: ECOM060

## Other information

This module incorporates some of the University’s five pillars of learning as follows:

Digital Capabilities:

Students in this module will learn how to use software packages Matlab and Dynare to carry out numerical solution and simulation of DSGE models.

Employability:

This module will provide students with skills for placement at Central Banks, Investment Banks and Academia. The material covers research methods at the frontier of macroeconomic policy.

Lecture sessions are designed to have the final hour each week to go over practical exercises and provide students with the opportunity to apply their knowledge to real-life examples used in the industry.

## Programmes this module appears in

Programme Semester Classification Qualifying conditions
Economics MRes 1 Compulsory A weighted aggregate mark of 50% is required to pass the module

Please note that the information detailed within this record is accurate at the time of publishing and may be subject to change. This record contains information for the most up to date version of the programme / module for the 2022/3 academic year.