ECON4103 Advanced Macroeconomic Analysis - 2020

Term 1
6 Units of Credit
On Campus
The course outline is not available for current semester. To view outlines from other year and/or semesters visit the archives

1. Course Details

Summary of Course

The first part of the course aims to provide methodological tools for advanced research in macroeconomics. The emphasis is on theory, although data guides the theoretical explorations. Students will study models where behaviour is derived from basic assumptions on consumers’ preferences, production technologies, and information; as well as alternative ways of solving dynamic optimisation problems. The second half is an introduction to the dynamic general equilibrium approach to macroeconomics, which evolved from neoclassical macroeconomics and real business cycle theory to include many aspects of the aggregate economy, including rational expectations, the open economy, exchange rates, nominal rigidities, and monetary and fiscal policy. For each topic, we will also learn problem solving and numerical techniques and apply them to the particular topic in discussion. Some data analysis is also part of the learning process.

Teaching Times and Locations

Please note that teaching times and locations are subject to change. Students are strongly advised to refer to the Class Timetable website for the most up-to-date teaching times and locations.

View course timetable

Course Policies & Support

Course Aims and Relationship to Other Courses

This course is an Honours course in advanced macroeconomics. It will build on the material that is taught in intermediate courses in macroeconomics. Relative to your past studies in economics, you will acquire an extra layer of professional knowledge and core analytical skills in advanced macroeconomics.

2. Staff Contact Details

Position Title Name Email Location Phone Consultation Times
Lecturer-in-chargeDrSang-Wook (Stanley) ChoRoom 4069385 3287Tuesdays 10:00-11:30 and by appointment
LecturerDrPratiti Chatterjee4469385 2150Fridays 4:00-5:30 and by appointment

Communication with staff​

You should feel free to contact your lecturer about any academic matter. However, we strongly encourage, for efficiency, enquiries about the subject material be made during consultation time. The lecturers will hold regular office hours during the term.  Email is the recommended means of initial communication with teaching staff, but discussion of course subject material will not be entered into via lengthy emails. Lecturers will reply to email within a reasonable time, with the following provisions:

  • The question should require a one to two sentence response. If it takes more, office hours are the more appropriate venue.
  • We will not answer emails that request information that can be found on the website or the syllabus.
  • We will not reply to emails concerning grading. For such matters, office hours are more appropriate.
  • It is also (strongly) preferable that you use your UNSW email address. Our spam filter is set to maximum, and university policy stipulates a preference for using university email accounts to discuss university business.
  • Always identify yourself and the course code in your email.
  • Please do not send attachments of any kind unless requested by the lecturers.
  • Please do not submit assessments by email unless requested by the lecturers.

We encourage you to provide course feedback and comments via email, if you wish. Please note that the lecturer has no advance notice of the date and time of the exam.

Student Enrolment Requests

Students can vary their own enrolment (including switching lecture streams or tutorials) via myUNSW until the end of Week 1. In general, most other student enrolment requests should be directed to The Nucleus: Student Hub (formerly Student Central). These include enrolment in full courses or tutorials, course timetable clashes, waiving prerequisites for any course, transfer-of-credit (international exchange, transfer to UNSW, cross-institutional study, etc.), or any other request which requires a decision about equivalence of courses and late enrolment for any course. Where appropriate, the request will be passed to the School Office for approval before processing. Note that enrolment changes are rarely considered after Week 2 classes have taken place.

3. Learning and Teaching Activities

Approach to Learning and Teaching in the Course

​The philosophy underpinning this course and its Teaching and Learning Strategies is based on “Guidelines on Learning that Inform Teaching at UNSW". Specifically, the lectures, tutorials and assessment have been designed to appropriately challenge students and support the achievement of the desired learning outcomes. A climate of inquiry and dialogue is encouraged between students and teachers and among students (in and out of class). The lecturers and tutors aim to provide meaningful and timely feedback to students to improve learning outcomes.

Understanding and using economic models is key element in economic analysis and in undertaking research in economics. The best way to gain a deep understanding of these models is by working through the models yourself using a pen and paper. Look at the equations and write them out (or draw the diagrams). Note what variables enter into the models and make sure you can provide an intuitive explanation as to why they are there. Think about the assumptions used in the model and ask why they are used. Look at how the model is solved and then look at the solution and see if it makes economic sense. In some cases, you should work through the data and convince yourself that the model is an appropriate specification. It usually takes time to build up these skills so it is good practice to begin early in the session and do a little at a time. In the lectures we will work through important models, but the numerous problem sets will give you practice at working with and solving economic models and help you to acquire the necessary skills.

Learning Activities and Teaching Strategies

​The examinable content of the course is defined by the references given in the Lecture Schedule, the content of Lectures, and the content of the Tutorial Program.  


The purpose of lectures is to provide a logical structure for the topics that make up the course, to emphasise the important concepts and methods of each topic, and to provide relevant examples to which the concepts and methods are applied. As not all topics will be presented extensively, students should refer to the textbook for further details and be sure to attempt the tutorial exercises.  


The object of the tutorials is to discuss various approaches to, and issues associated with, the assigned exercises and topics covered in the course.

Out-of-Class Study

While students may have preferred individual learning strategies, it is important to note that most learning will be achieved outside of class time. Lectures can only provide a structure to assist your study, and tutorial time is limited.

An “ideal” strategy (on which the provision of the course materials is based) might include:  

  • Reading of the relevant chapter(s) of the text and any readings before the lecture. This will give you a general idea of the topic area.
  • Attendance at lectures. Here the context of the topic in the course and the important elements of the topic are identified. The relevance of the topic will be explained.
  • Attending tutorials and attempting the tutorial questions.

5. Course Resources

The website for this course is on UNSW Moodle. Additional materials such as solutions to the tutorial exercises, lecture notes, slides, etc., will be provided through the course website on UNSW Moodle.

There is no prescribed textbook for the course. Students may find the following textbooks (available in the UNSW Library) useful for some of the first half of the course:

  • (LS) Lars Ljungqvist and Thomas J. Sargent, Recursive Macroeconomics Theory, 4th edition, The MIT Press (2018)
  • (SLP) Nancy L. Stokey and Robert E. Lucas, with Edward C. Prescott, Recursive Methods in Economic Dynamics, Harvard University Press (1989)
  • (CL) Thomas Cooley, Frontiers of Business Cycle Research, Princeton University Press (1995)
  • (AC) Jerome Adda and Russell Cooper, Dynamic Economics, The MIT Press (2003).                  

For the second half of the course (Weeks 6-10), we cover some chapters from the following books and complement them with the articles also listed below. Specific chapter references for each week will be provided ahead of class.

  • McCandles, George - The ABCs of RBCs: An Introduction to Dynamic Macroeconomic Models - (2008)
  • King, Plosser, and Rebelo - Journal of Monetary Economics – 1988 - Production, growth and business cycles: I. The basic neoclassical model
  • King, Plosser, and Rebelo - Computational Economics -2002- Production, Growth and Business Cycles: Technical Appendix
  • Blanchard and Kahn - Econometrica -1980 - The Solution of Linear Difference Models Under Rational Expectations
  • Mankiw, Gregory - Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly - The Quarterly Journal of Economics, 1985
  • Blanchard, Olivier and Kiyotaki, Nobuhiro - Monopolistic Competition and the Effects of Aggregate Demand, 1987
  • Gali, Jordi - Monetary Policy, Inflation, and the Business Cycle An Introduction to the New Keynesian Framework and Its Applications - Second Edition, 2015

Complementary Articles:

  • Clarida R, Gali J and M Gertler (1999), “The Science of Monetary Policy: A New Keynesian Perspective”, Journal of Economic Literature, Vol. 37, No. 4, pp 1661-1707
  • Eggertsson, G. B., & Woodford, M. (2003). Optimal monetary policy in a liquidity trap (No. w9968). National Bureau of Economic Research
  • Eggertsson, G. B., & Mehrotra, N. R. (2014). A model of secular stagnation (No. w20574). National Bureau of Economic Research.
  • Mancini Griffoli T (2013), “Dynare user guide: An introduction to the solution and estimation of DSGE”, Available at
  • Sims C (2001), “Solving Linear Rational Expectations Models”, Computational Economics, 20:1-20.
  • Uhlig H (1995), “A Toolkit for Analyzing Nonlinear Dynamic Stochastic Models Easily”, Tilburg University, Center for Economic Research Discussion Paper No 97.

6. Course Evaluation & Development

Feedback is regularly sought from students and continual improvements are made based on this feedback. At the end of this course, you will be asked to complete the myExperience survey, which provides a key source of student evaluative feedback. Your input into this quality enhancement process is extremely valuable in assisting us to meet the needs of our students and provide an effective and enriching learning experience. The results of all surveys are carefully considered and do lead to action towards enhancing educational quality.

​The School of Economics strives to be responsive to student feedback. If you would like more information on how the design of this course and changes made to it over time have taken students’ needs and preferences into account, please contact the Director of Education at the School of Economics.

In 2019, with the introduction of the new trimester structure, there was a concern regarding the pace of the course being too fast and students finding inadequate time to review for exams. Taking these comments and feedback into account, we are now providing more time between the end of lecture in Week 4 and the mid-term exam. This will provide students extra time to space out their assignments and catch up with lecture material.

We welcome feedback and constructive comments by email and by discussion forums.

7. Course Schedule

Note: for more information on the UNSW academic calendar and key dates including study period, exam, supplementary exam and result release, please visit:
Week Activity Topic Assessment/Other
Week 1: 17 FebruaryLecture & tutorial

Competitive Equilibrium and Pareto Optimality

Lecture notes (provided courtesy of Professor Dirk Krueger)

LS Ch. 8


Week 2: 24 FebruaryLecture & tutorial

Introduction to the Neoclassical Growth Model and Dynamic Programming

Lecture notes

LS Ch. 3-5

SLP Ch. 2-4

CL Ch. 1-2


Week 3: 02 MarchLecture & tutorial

Practical Dynamic Programming – numerical solutions using value function iteration

Lecture notes

SLP Ch. 2-4

AC Ch. 2-3

Week 4: 09 MarchLecture & tutorial

Calibration of the Neoclassical Growth Model

Lecture notes

CL Ch. 1-2

Week 5: 16 MarchOffice hour only

Review (office hours)

Week 6: 23 MarchLecture and Midterm

Introduction to Real Business Cycle Models (RBC)

Solution Techniques and Tools

  • Log Linearization
  • Solving Linear Rational Expectation Models - Eigen Values

McCandles (2008)

Blanchard and Kahn (1980)

Midterm scheduled for Friday, 27th March, 3-5pm in Quad G053

Week 7: 30 MarchLecture and tutorial

Neoclassical Growth Model and Business Cycles (Continued)

McCandles (2008)

King, Plosser, and Rebelo (1988)

King, Plosser, and Rebelo (2002)

Week 8: 06 AprilLecture only, no tutorial

Introduction to Nominal Rigidities

  • Sticky Prices - Motivation
  • Sticky Prices and the New Keynesian Model

Mankiw (1985)

Blanchard and Kiyotaki (1987)

Class Notes

McCandles (2008)

No tutorial on 10th April due to Good Friday public holiday.

Week 9: 13 AprilLecture and tutorial

New Keynesian Model (Continued)

New Keynesian Model (Extensions)

  • New Keynesian Model and Monetary Policy
  • New Keynesian Model and Fiscal Policy (if time permits)


Clarida, Gali, Gertler (1999);

Gali (2015), Ch 3-6

Week 10: 20 April




Final Exam

UNSW exam period

8. Policies and Support

Information about UNSW Business School protocols, University policies, student responsibilities and education quality and support.

Program Learning Outcomes

The Business School places knowledge and capabilities at the core of its curriculum via seven Program Learning Outcomes (PLOs). These PLOs are systematically embedded and developed across the duration of all coursework programs in the Business School.

PLOs embody the knowledge, skills and capabilities that are taught, practised and assessed within each Business School program. They articulate what you should know and be able to do upon successful completion of your degree.

Upon graduation, you should have a high level of specialised business knowledge and capacity for responsible business thinking, underpinned by ethical professional practice. You should be able to harness, manage and communicate business information effectively and work collaboratively with others. You should be an experienced problem-solver and critical thinker, with a global perspective, cultural competence and the potential for innovative leadership.

All UNSW programs and courses are designed to assess the attainment of program and/or course level learning outcomes, as required by the UNSW Assessment Design Procedure. It is important that you become familiar with the Business School PLOs, as they constitute the framework which informs and shapes the components and assessments of the courses within your program of study.

PLO 1: Business knowledge

Students will make informed and effective selection and application of knowledge in a discipline or profession, in the contexts of local and global business.

PLO 2: Problem solving

Students will define and address business problems, and propose effective evidence-based solutions, through the application of rigorous analysis and critical thinking.

PLO 3: Business communication

Students will harness, manage and communicate business information effectively using multiple forms of communication across different channels.

PLO 4: Teamwork

Students will interact and collaborate effectively with others to achieve a common business purpose or fulfil a common business project, and reflect critically on the process and the outcomes.

PLO 5: Responsible business practice

Students will develop and be committed to responsible business thinking and approaches, which are underpinned by ethical professional practice and sustainability considerations.

PLO 6: Global and cultural competence

Students will be aware of business systems in the wider world and actively committed to recognise and respect the cultural norms, beliefs and values of others, and will apply this knowledge to interact, communicate and work effectively in diverse environments.

PLO 7: Leadership development

Students will develop the capacity to take initiative, encourage forward thinking and bring about innovation, while effectively influencing others to achieve desired results.

These PLOs relate to undergraduate and postgraduate coursework programs.  Separate PLOs for honours and postgraduate research programs are included under 'Related Documents'.

Business School course outlines provide detailed information for students on how the course learning outcomes, learning activities, and assessment/s contribute to the development of Program Learning Outcomes.



UNSW Graduate Capabilities

The Business School PLOs also incorporate UNSW graduate capabilities, a set of generic abilities and skills that all students are expected to achieve by graduation. These capabilities articulate the University’s institutional values, as well as future employer expectations.

UNSW Graduate CapabilitiesBusiness School PLOs
Scholars capable of independent and collaborative enquiry, rigorous in their analysis, critique and reflection, and able to innovate by applying their knowledge and skills to the solution of novel as well as routine problems.
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 4: Teamwork
  • PLO 7: Leadership development

Entrepreneurial leaders capable of initiating and embracing innovation and change, as well as engaging and enabling others to contribute to change
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 4: Teamwork
  • PLO 6: Global and cultural competence
  • PLO 7: Leadership development

Professionals capable of ethical, self-directed practice and independent lifelong learning
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 5: Responsible business practice

Global citizens who are culturally adept and capable of respecting diversity and acting in a socially just and responsible way.
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 4: Teamwork
  • PLO 5: Responsible business practice
  • PLO 6: Global and cultural competence

While our programs are designed to provide coverage of all PLOs and graduate capabilities, they also provide you with a great deal of choice and flexibility.  The Business School strongly advises you to choose a range of courses that assist your development against the seven PLOs and four graduate capabilities, and to keep a record of your achievements as part of your portfolio. You can use a portfolio as evidence in employment applications as well as a reference for work or further study. For support with selecting your courses contact the UNSW Business School Student Centre.

Academic Integrity and Plagiarism

Academic Integrity is honest and responsible scholarship. This form of ethical scholarship is highly valued at UNSW. Terms like Academic Integrity, misconduct, referencing, conventions, plagiarism, academic practices, citations and evidence based learning are all considered basic concepts that successful university students understand. Learning how to communicate original ideas, refer sources, work independently, and report results accurately and honestly are skills that you will be able to carry beyond your studies.

The definition of academic misconduct is broad. It covers practices such as cheating, copying and using another person’s work without appropriate acknowledgement. Incidents of academic misconduct may have serious consequences for students.


UNSW regards plagiarism as a form of academic misconduct. UNSW has very strict rules regarding plagiarism. Plagiarism at UNSW is using the words or ideas of others and passing them off as your own. All Schools in the Business School have a Student Ethics Officer who will investigate incidents of plagiarism and may result in a student’s name being placed on the Plagiarism and Student Misconduct Registers.

Below are examples of plagiarism including self-plagiarism:

Copying: Using the same or very similar words to the original text or idea without acknowledging the source or using quotation marks. This includes copying materials, ideas or concepts from a book, article, report or other written document, presentation, composition, artwork, design, drawing, circuitry, computer program or software, website, internet, other electronic resource, or another person's assignment, without appropriate acknowledgement of authorship.

Inappropriate Paraphrasing: Changing a few words and phrases while mostly retaining the original structure and/or progression of ideas of the original, and information without acknowledgement. This also applies in presentations where someone paraphrases another’s ideas or words without credit and to piecing together quotes and paraphrases into a new whole, without appropriate referencing.

Collusion: Presenting work as independent work when it has been produced in whole or part in collusion with other people. Collusion includes:

  • Students providing their work to another student before the due date, or for the purpose of them plagiarising at any time
  • Paying another person to perform an academic task and passing it off as your own
  • Stealing or acquiring another person’s academic work and copying it
  • Offering to complete another person’s work or seeking payment for completing academic work

Collusion should not be confused with academic collaboration (i.e., shared contribution towards a group task).

Inappropriate Citation: Citing sources which have not been read, without acknowledging the 'secondary' source from which knowledge of them has been obtained.

Self-Plagiarism: ‘Self-plagiarism’ occurs where an author republishes their own previously written work and presents it as new findings without referencing the earlier work, either in its entirety or partially. Self-plagiarism is also referred to as 'recycling', 'duplication', or 'multiple submissions of research findings' without disclosure. In the student context, self-plagiarism includes re-using parts of, or all of, a body of work that has already been submitted for assessment without proper citation.

To see if you understand plagiarism, do this short quiz:


The University also regards cheating as a form of academic misconduct. Cheating is knowingly submitting the work of others as their own and includes contract cheating (work produced by an external agent or third party that is submitted under the pretences of being a student’s original piece of work). Cheating is not acceptable at UNSW.

If you need to revise or clarify any terms associated with academic integrity you should explore the 'Working with Academic Integrity' self-paced lessons available at:

For UNSW policies, penalties, and information to help you avoid plagiarism see: as well as the guidelines in the online ELISE tutorials for all new UNSW students: For information on student conduct see:

For information on how to acknowledge your sources and reference correctly, see: If you are unsure what referencing style to use in this course, you should ask the lecturer in charge.

Student Responsibilities and Conduct

​Students are expected to be familiar with and adhere to university policies in relation to class attendance and general conduct and behaviour, including maintaining a safe, respectful environment; and to understand their obligations in relation to workload, assessment and keeping informed.

Information and policies on these topics can be found on the 'Managing your Program' website.


It is expected that you will spend at least ten to twelve hours per week studying for a course except for Summer Term courses which have a minimum weekly workload of twenty to twenty four hours. This time should be made up of reading, research, working on exercises and problems, online activities and attending classes. In periods where you need to complete assignments or prepare for examinations, the workload may be greater. Over-commitment has been a cause of failure for many students. You should take the required workload into account when planning how to balance study with employment and other activities.

We strongly encourage you to connect with your Moodle course websites in the first week of semester. Local and international research indicates that students who engage early and often with their course website are more likely to pass their course.

View more information on expected workload


Your regular and punctual attendance at lectures and seminars or in online learning activities is expected in this course. The Business School reserves the right to refuse final assessment to those students who attend less than 80% of scheduled classes where attendance and participation is required as part of the learning process (e.g., tutorials, flipped classroom sessions, seminars, labs, etc.).

View more information on attendance

General Conduct and Behaviour

You are expected to conduct yourself with consideration and respect for the needs of your fellow students and teaching staff. Conduct which unduly disrupts or interferes with a class, such as ringing or talking on mobile phones, is not acceptable and students may be asked to leave the class.

View more information on student conduct

Health and Safety

UNSW Policy requires each person to work safely and responsibly, in order to avoid personal injury and to protect the safety of others.

View more information on Health and Safety

Keeping Informed

You should take note of all announcements made in lectures, tutorials or on the course web site. From time to time, the University will send important announcements to your university e-mail address without providing you with a paper copy. You will be deemed to have received this information. It is also your responsibility to keep the University informed of all changes to your contact details.

Student Support and Resources

​The University and the Business School provide a wide range of support services and resources for students, including:

Business School EQS Consultation Program
The Consultation Program offers academic writing, literacy and numeracy consultations, study skills, exam preparation for Business students. Services include workshops, online resources, individual and group consultations. 
Level 1, Room 1035, Quadrangle Building.
02 9385 4508

Communication Resources
The Business School Communication and Academic Support programs provide online modules, communication workshops and additional online resources to assist you in developing your academic writing.

Business School Student Centre
The Business School Student Centre provides advice and direction on all aspects of admission, enrolment and graduation.
Level 1, Room 1028 in the Quadrangle Building
02 9385 3189

UNSW Learning & Careers Hub
The UNSW Learning & Careers Hub provides academic skills and careers support services—including workshops, individual consultations and a range of online resources—for all UNSW students. See their website for details.
Lower Ground Floor, North Wing Chancellery Building.
02 9385 2060

Student Support Advisors
Student Support Advisors work with all students to promote the development of skills needed to succeed at university, whilst also providing personal support throughout the process.
John Goodsell Building, Ground Floor.
02 9385 4734

International Student Support
The International Student Experience Unit (ISEU) is the first point of contact for international students. ISEU staff are always here to help with personalised advice and information about all aspects of university life and life in Australia.
Advisors can support you with your student visa, health and wellbeing, making friends, accommodation and academic performance.
02 9385 4734

Equitable Learning Services
Equitable Learning Services (formerly Disability Support Services) is a free and confidential service that provides practical support to ensure that your health condition doesn't adversely affect your studies. Register with the service to receive educational adjustments.
Ground Floor, John Goodsell Building.
02 9385 4734

UNSW Counselling and Psychological Services
Provides support and services if you need help with your personal life, getting your academic life back on track or just want to know how to stay safe, including free, confidential counselling.
Level 2, East Wing, Quadrangle Building.
02 9385 5418

Library services and facilities for students
The UNSW Library offers a range of collections, services and facilities both on-campus and online.
Main Library, F21.
02 9385 2650

Moodle eLearning Support
Moodle is the University’s learning management system. You should ensure that you log into Moodle regularly.
02 9385 3331

UNSW IT provides support and services for students such as password access, email services, wireless services and technical support.
UNSW Library Annexe (Ground floor).
02 9385 1333

Search Degrees

Find a degree or course