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Modelling the Australian Macroeconomy (ECOM40005)

HonoursPoints: 12.5On Campus (Parkville)

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Year of offer2019
Subject levelHonours
Subject codeECOM40005
Semester 2
FeesSubject EFTSL, Level, Discipline & Census Date

This subject examines the use of macroeconomic models in economic policy analysis. The overall aim of the course is to discuss system approaches to estimating the macro-economy. Special attention will be paid to the SVAR and DSGE approaches and the relationship between them. The course will also include a discussion of optimal and unconventional policies. Topics include: impulse response functions, policy multipliers; policy simulation techniques and sensitivity analysis of economy-wide models. Applications to Australia will also be discussed.

Intended learning outcomes

On successful completion of this subject students should be able to:

  • Specify and estimate VAR/SVAR models;
  • Generate and understand impulse response functions and forecast error variance decompositions;
  • Understand alternative identification strategies and apply them to identify monetary policy shocks, fiscal shocks and technology shocks;
  • Specify a basic New Keynesian model; generalise it for a small open economy as well as other commonly included extensions in empirical applications;
  • Apply econometrics methods (Generalized Method of Moments and the Kalman filter) commonly used to estimate DSGE models;
  • Analyse policies by simulating DSGE models;
  • Understand the relevance of optimal and unconventional policies;
  • Evaluate recent central bank and academic research using VAR/SVAR and small-open economy DSGE models.

Generic skills

  • High level of development: statistical reasoning; application of theory to practice; interpretation and analysis; critical thinking; synthesis of data and other information; receptiveness to alternative ideas.

  • Moderate level of development: oral communication; written communication; collaborative learning; problem solving; evaluation of data and other information; use of computer software.

  • Some level of development: team work; accessing data and other information from a range of sources.

Last updated: 13 August 2019