ECM603: Advanced Macroeconomic Analysis

Module code: ECM603

Module provider: Economics; School of Philosophy, Politics and Economics

Credits: 20

Level: Postgraduate Masters

When you'll be taught: Semester 1

Module convenor: Dr Alexander Mihailov, email: a.mihailov@reading.ac.uk

Pre-requisite module(s):

Co-requisite module(s):

Pre-requisite or Co-requisite module(s):

Module(s) excluded:

Placement information: NA

Academic year: 2024/5

Available to visiting students: Yes

Talis reading list: Yes

Last updated: 23 May 2024

Overview

Module aims and purpose

This module introduces students to a set of modern analytical and computational topics and methods in macroeconomic theory and policy and the corresponding programming techniques and software, namely Dynare and MATLAB.

Module learning outcomes

By the end of the module, it is expected that students will be able to:

1. Programme and assess the simulation or estimation of various widely used dynamic-stochastic general equilibrium (DSGE) models and macroeconomic policies in Dynare and MATLAB;
2. Apply such skills in their own research or to explore results in journal articles of interest;
3. Employ the studied concepts and methods to analyse and interpret real-world phenomena.
4. Relate how various shocks and monetary and fiscal policy at the national and international level affect the dynamics of output, consumption, investment, exports and imports, inflation, employment, unemployment and other key macroeconomic variables.
5. Discuss real world macroeconomic phenomena in the context of core macroeconomic theory, empirics and simulation/forecasting.

Module content

1. Simulation and analysis of the deterministic Neoclassical Growth model.
2. Simulation and analysis of the stochastic Real Business Cycle model.
3. Closed- and open-economy Real Business Cycle models.
4. Simulation and analysis of the basic New Keynesian model under a Taylor rule.
5. Simulation and analysis of the basic New Keynesian model under optimal monetary policy.
6. Simulation and analysis of the basic small open-economy New Keynesian model under a Taylor rule.
7. Bayesian estimation and analysis of the Smets-Wouters (2007) medium-scale New Keynesian benchmark on US quarterly data and of its extension to financial frictions.
8. Bayesian estimation and analysis of the Gali-Smets-Wouters (2012) extension with indivisible labour and unemployment; simulating the macroeconomic effects of the COVID-19 lockdown as an adverse rare labour supply shock.
9. Bayesian estimation and analysis of medium-scale open-economy model versions under complete and incomplete international assets markets and optimal policy.
10. Heterogeneous agents in medium-scale New Keynesian models: limited asset market participation and optimal monetary-fiscal policy.

Structure

Teaching and learning methods

Detailed guidance on the topics covered will be provided in the weekly lectures and in computer classes, together with examples, exercises and solutions to facilitate understanding of key concepts. Students will be expected to supplement the lectures with the recommended reading of articles and book chapters and to do some research using the library, internet or other resources. Office hours are available for students to consult the lecturer on an individual basis.

Study hours

At least 30 hours of scheduled teaching and learning activities will be delivered in person, with the remaining hours for scheduled and self-scheduled teaching and learning activities delivered either in person or online. You will receive further details about how these hours will be delivered before the start of the module.

Please note the independent study hours above are notional numbers of hours; each student will approach studying in different ways. We would advise you to reflect on your learning and the number of hours you are allocating to these tasks.

Semester 1 The hours in this column may include hours during the Christmas holiday period.

Semester 2 The hours in this column may include hours during the Easter holiday period.

Summer The hours in this column will take place during the summer holidays and may be at the start and/or end of the module.

Assessment

Requirements for a pass

Students need to achieve an overall module mark of 50% to pass this module.

Summative assessment

Penalties for late submission of summative assessment

The Support Centres will apply the following penalties for work submitted late:

Assessments with numerical marks

• where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of three working days;
• the mark awarded due to the imposition of the penalty shall not fall below the threshold pass mark, namely 40% in the case of modules at Levels 4-6 (i.e. undergraduate modules for Parts 1-3) and 50% in the case of Level 7 modules offered as part of an Integrated Masters or taught postgraduate degree programme;
• where the piece of work is awarded a mark below the threshold pass mark prior to any penalty being imposed, and is submitted up to three working days after the original deadline (or any formally agreed extension to the deadline), no penalty shall be imposed;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.

Assessments marked Pass/Fail

• where the piece of work is submitted within three working days of the deadline (or any formally agreed extension of the deadline): no penalty will be applied;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension of the deadline): a grade of Fail will be awarded.

The University policy statement on penalties for late submission can be found at: https://www.reading.ac.uk/cqsd/-/media/project/functions/cqsd/documents/qap/penaltiesforlatesubmission.pdf

You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.

Formative assessment

Formative assessment is any task or activity which creates feedback (or feedforward) for you about your learning, but which does not contribute towards your overall module mark.

Reassessment

Additional costs