Modelling the Australian Macroeconomy

Subject ECOM40005 (2016)

Note: This is an archived Handbook entry from 2016.

Credit Points: 12.5
Level: 4 (Undergraduate)
Dates & Locations:

This subject has the following teaching availabilities in 2016:

Semester 2, Parkville - Taught on campus.
Pre-teaching Period Start not applicable
Teaching Period 25-Jul-2016 to 23-Oct-2016
Assessment Period End 18-Nov-2016
Last date to Self-Enrol 05-Aug-2016
Census Date 31-Aug-2016
Last date to Withdraw without fail 23-Sep-2016

Timetable can be viewed here. For information about these dates, click here.
Time Commitment: Contact Hours: Three hours of lectures/seminars per week
Total Time Commitment: Not available

Admission into BH-COM or BH-ARTS (Economics) and both;

Study Period Commencement:
Credit Points:


Recommended Background Knowledge: None
Non Allowed Subjects:
Core Participation Requirements:

For the purposes of considering request for Reasonable Adjustments under the Disability Standards for Education (Cwth 2005), and Student Support and Engagement Policy, academic requirements for this subject are articulated in the Subject Overview, Learning Outcomes, Assessment and Generic Skills sections of this entry.

It is University policy to take all reasonable steps to minimise the impact of disability upon academic study, and reasonable adjustments will be made to enhance a student's participation in the University's programs. Students who feel their disability may impact on meeting the requirements of this subject are encouraged to discuss this matter with a Faculty Student Adviser and Student Equity and Disability Support:


Prof Guay Lim


Subject Overview:

This subject examines the use of open economy macroeconomic models in economic policy analysis. Topics include important Australian macroeconomic data sets; the design of macroeconometric and VAR models of the Australian economy; the derivation of policy multipliers; policy simulation techniques and sensitivity analysis of economy-wide models; recent developments in the theory of economic growth; and an examination of some current issues in macroeconomic policy.

Learning Outcomes:

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

  • Explain the limitations of static comparative-equilibrium analysis (including IS-LM) for policy formation and evaluation;
  • Evaluate the role of Walras' Law in macroeconomic modelling;
  • Apply models to capture dynamic elements in markets and ensure a consistent relationship between stocks and flows;
  • Identify recursive elements of models involving a number of structural equations;
  • Apply numerical algorithms to solve non-linear and simultaneous models;
  • Describe the differences between short and long run policy multipliers;
  • Express a system of linear equations in matrix form and solve the system for relevant multipliers;
  • Describe and evaluate alternative models of the equilibrium rate of unemployment;
  • Describe and evaluate alternative models of the demand for stocks of financial assets, including money;
  • Explain models of household consumption behaviour;
  • Explain and evaluate competing models of production and economic growth;
  • Identify the various rules used to solve both static and dynamic economic models;
  • Analyse the documentation that accompanies models of the Australian economy;
  • Perform policy simulations and analyse the results.
  • A 2-hour end-of-semester examination, end of semester (60%)
  • Four class assignments totalling approximately 500 words, due in weeks 3, 6, 9 and 12, (40%)
Prescribed Texts:

You will be advised of prescribed texts by your lecturer.

Recommended Texts:

Information Not Available

Breadth Options:

This subject is not available as a breadth subject.

Fees Information: Subject EFTSL, Level, Discipline & Census Date
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.

Download PDF version.