Modelling the Australian Macroeconomy

This subject has the following teaching availabilities in 2016:

Estimated total time commitment of 120 hours per semester

ECON40002 Advanced Macroeconomics and one of ECOM40006 Econometric Techniques or ECOM90013 Econometric Techniques

None

Please refer to the prerequisites.

ECOM40005 Modelling the Australian Macroeconomy

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: http://services.unimelb.edu.au/disability

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.

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 (60%)
• Four individual 750 word class assignments worth 10% each - (40%). Due in weeks 3, 6, 9 and 12.

You will be advised of prescribed texts by your lecturer.

This subject is not available as a breadth subject.

On successful completion of this subject, students should have improved the following 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 across a range sources.

Students may not gain credit for both ECOM90012 Modelling the Australian Macroeconomy and ECOM40005 Modelling the Australian Macroeconomy.