Home > Study > Summer schools > Methods Summer Programme > Methods for Economists > ME422 Tools for Macroeconomists: Advanced Tools
How to contact us

Teri Dunn
Programme Executive

Methods Summer Programme
London School of Economics
Houghton Street
London WC2A 2AE

Email: summer.methods@lse.ac.uk
Tel: +44 (0)20 7955 6422

Register your interest here

ME422 Tools for Macroeconomists: Advanced Tools

15_1276 Methods images 475x213_2largehorizontal

Applications are now open! Click here to apply

This graduate-level course teaches state-of-the-art techniques to solve and analyse advanced models. In particular, models with heterogeneous agents, continuous-time models, and also models in which the economy can be at the zero lower bound for the policy rate.  

In addition to teaching techniques, the course also focuses on practical problems that researchers run into when using these methods. 

This course is aimed at PhD students and academics.

Course benefits
This course will provide students with:

  • a chance to learn a solid set of advanced tools to analyse non-trivial modern macroeconomic models
  • a better understanding of models with heterogeneous agents

Knowledge of DSGE models (e.g. Euler equation, state variables, Bellman equation). Some knowledge of Matlab. Students with a rudimentary knowledge of Matlab may still take the course, but may not attain the full benefits of the afternoon computer assignments.
Some knowledge on solving simple DSGE models with perturbation methods (Dynare) and projection methods.

An important part of the course is spent on algorithms to solve models with heterogeneous agents and also on models with boundedly rational agents. The other part of the course is spent on solving continuous-time models and models with occasionally binding constraints; in particular, models in which the policy interest rate is occasionally constrained by the zero lower bound. 

In the morning sessions, a lecture is given by one of the two instructors. In the afternoon sessions, students (typically in groups) work on computer assignments with the help of the instructors and teaching assistants. 

Solving and simulating models with heterogeneous agents

  • Aggregation
  • Approximate aggregation
  • Cross-sectional distributions as state variables
  • Incomplete markets
  • Aiyagari model
  • Solving the Aiyagari model using iterative methods
  • Krusell & Smith algorithm to solve models with heterogeneous agents and aggregate uncertainty
  • Xpa algorithm to solve models with heterogeneous agents and aggregate uncertainty
  • Calculating the ergodic distribution of the Aiyagari model in one step
  • Boundedly rational agents

Solving continuous-time models

  • Continuous-time models for models with a representative agent and heterogeneous agents

Models with occasionally binding constraints

  • Models in which the policy rate can be at the zero lower bound

More detailed information can be found on Professor den Haan's website. This currently shows information for the 2016 course, however this will be updated shortly.

Software used
Dynare and MATLAB

Great course! I am very happy I went, I learnt a lot. Wouter and Ponthus did a great job at covering SO much material in a way one could follow!
2016 Participant

The lectures were excellent, and the exercises fit extremely well with them.
2015 Participant

Professor den Haan is an outstanding teacher and mentor. He provided a tremendous amount of insight not just into the material but also spoke about aspects of research methodology, providing guidance about the kind of questions a researcher should ask, with an emphasis on selecting not the most complex and awe-inspiring, but rather the most appropriate techniques, while simultaneously emphasising that not just awareness but also deep knowledge of rival techniques is necessary.
2014 Participant

Excellent. The instructor introduces several frontier fields of research.
2011 Participant

The course sets the right focus, and is very well organized and structured. The professor is an excellent teacher and highly committed.
2011 Participant

Please note: The below timetable contains approximate hours only.

  Tu  Th   F
 Morning lecture  3 3  3 3 3
 Afternoon class 3 3 3 3 3
2016 box image

Course details

21 - 25 August 2017

Lectures (15 hours)
Practical classes (15 hours)

LSE's Central London Campus

Teaching faculty
Professor Wouter den Haan
Department of Economics
Dr Pontus Rendahl
University of Cambridge

2017 Tuition fees
Student rate: £725
Academic staff/charity rate: £1,500
Professional rate: £2,300

*Current PhD students are also eligible for a £150 ESRC scholarship

15_1276 Methods images 238x1052

You may also be interested in...
Tools for Macroeconomists: The Essentials  (14-18 August 2017)