• Offered for Year: 2024/25

• Module Leader(s): Dr Roberto Bonilla Trejos

• Owning School: Newcastle University Business School
• Teaching Location: Newcastle City Campus

Semesters

Your programme is made up of credits, the total differs on programme to programme.

Aims

The sessions are designed to provide students with an introduction to Economic Theory and related the fundamental concepts, as well an understanding of the aims, components and characteristics of mathematic economic models, making a distinction between Microeconomic and Macroeconomic modules. This provides an overview of the economics process: from empirical observations, to designing an appropriate mathematical model, obtaining theoretical predictions, and then testing the model’s predictions through econometrics methods.

Outline Of Syllabus

Outline of the Syllabus

1)       Formalisation and mathematical models:
a)       What is a model?
b)       Mathematics as just another language.
c)       Why and how do we use mathematics?

2)       Basic ingredients of a model, and the roles of each.
a)       Assumptions
i)       The building blocks of a model
ii)       From informally choosing the adequate assumptions; to an exact, positive science.
b)       Exogenous variables.
c)       Endogenous variables (vs exogenous variables).
d)       Results (vs Assumptions).
i)       Learn to distinguish, or face the consequences.

3)       Two broad types of models:
a)       Decision theory models.
b)       Equilibrium models.
i)       As a set of decision theory problems that are linked.
ii)       Two Examples.

4)       Equilibrium (equilibrium models)
a)       What is an equilibrium?
b)       The concept of “in equilibrium”
i)       Supporting an equilibrium
ii)       One-step deviations.
c)       Example: Burdett and Coles (1997).

5)       Comparative statics – changing exogenous variables
a)       In decision theory problems.
b)       In equilibrium models.
c)       The close link between assumptions and results – what if assumptions change?
d)       Examples.

6)       The concept of “Equilibrium Conditions”
a)       As the heart of a theoretical model.
i)       How they are arrived at?
ii)       How to use them?
Example: PIssarides 1990.

7)       Multiple Equilibrium –
a)       A chicken and egg story
b)       Example: Burdett and Coles (1997).
c)      
8)       The process
a)       Identifying an empirical regularity.
b)       Building a theoretical model to capture salient features.
i)       Not too complicated….or face the consequences.
c)       Solving the model.
d)       Translating the results into English – The theoretical predictions.
e)       Designing an econometric exercise to test the theoretical predictions.

9)       Detailed examples
a)       Bonilla et al (2019) Kiraly and Wildman (2019).

10)       Miscellaneous
a)       Explaining a complicated argument
i)       Break it into small simple arguments

b)       Using accurate language
i)       Or face the consequences

11)       Analysis “within the model”
a)       Or face the consequences

12)       How to use, read, and explain mathematics and graphics?

Teaching Methods

Teaching Activities

Teaching Rationale And Relationship

N/A

Assessment Methods

The format of resits will be determined by the Board of Examiners

Other Assessment

Assessment Rationale And Relationship

There is no assessment for this module

Reading Lists

• NBS8903's Reading List

Timetable

• Timetable Website: www.ncl.ac.uk/timetable/
• NBS8903's Timetable