Content, progress and pedagogy of the module

In macroeconomics teaching and project writing, students have often heard or themselves raised criticism of the economic models used, particularly for not reflecting reality and therefore being unable to warn economists ahead of the economic crisis.

In this elective course, students are introduced to how they can build macroeconomic models themselves that are resilient to this criticism, and where economists, based on these models, were actually able to warn of an upcoming crisis. Where other models were criticized for lacking a link between the financial sector and the real economy, this link is an integral part of this type of model.

The approach will be to start with the premise that economies can be realistically represented by a system based on national accounts. The course will explore how flows of income, expenditure, and production, intertwined with stocks of assets and liabilities, determine how the economy evolves over time. This means that students will work with models that reflect open economies, such as the Danish economy, as well as models that can replicate the observable development of specific macroeconomic variables. The models thus become easier to transfer to current economic discussions.

The models are solved through computer simulation, which also provides an introduction to programming.

The course can therefore be seen as a great opportunity to create a model that could later be used in a bachelor’s thesis or semester project.

Learning objectives

Knowledge

The aim is that after the module the student has knowledge of:

• how the crisis was predicted using these models.
• the difference between stocks and flows in the national accounts.
• the link between the financial side and the real side of the economy.

Skills

The aim is that after the module the student has skills to:

• constructing their own simple SFC models, where the complexity of the model is determined solely by individual ambition and ability.
• solving models numerically through computer simulation.
• critically evaluating models.

Competences

The aim is that after the module the student has the competencies in:

• analyze macroeconomic effects of, for example, fiscal/monetary policy on the real side of the economy and how this affects the financial side of the economy.
• analyze macroeconomic effects of changes in the financial side of the economy and how this affects the real side of the economy.
• independently work with their own (simple) model.

Type of instruction

For further information see §17.

Exam

Exams