To provide students with grounding in the techniques of modern macroeconomic theory. The tools you will learn will enable you to understand cutting edge research and provide foundations on which you can build in your own research.
Aims and Objectives
The aim of this module is to introduce students to recursive methods in economics. These tools will provide you with foundations on which you can build in your future studies or applied work. Although examples will be drawn from macroeconomics, these tools are equally applicable in other fields, such as financial, labour, public, development and environmental economics. On successful completion of this module, you should be able to (i) understand the recursive nature of dynamic problems in economics (ii) solve dynamic optimisation problems with continuous and discrete choices (iii) characterise the properties of equilibrium decision rules, pricing functions, distributions of state and choice variables, and (iv) solve simple macro models numerically.
Having successfully completed this module you will be able to:
- Solve dynamic optimisation problems
- Characterize dynamic equilibria and solve for equilibrium decision rules and pricing functions that generate time series of key macroeconomic variables
- Evaluate the efficiency of dynamic equilibria
- Quantitatively evaluate the models
The module covers the most essential tools in modern macroeconomic theory. We will draw on some best-known applications (eg, business cycles and asset pricing) to practice the tools. The topics covered are • Markov processes • Dynamic programming • Competitive equilibrium with complete markets • Recursive competitive equilibrium • Incomplete markets and heterogeneity
Learning and Teaching
|Total study time||200|
20% coursework and 80% three-hour written examination at the end of semester 1. Resit assessment will be a three-hour written examination in August/September immediately following the failure. In the event of you having to resit this unit, your coursework marks will not be carried forward
|Exam (3 hours)||80%|
Repeat type: Internal & External