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ECON103: Quantitative Methods for Economics


Department: Economics NCF Level: FHEQ/QCF/NQF4//RQF4
Study Level: Part I Credit Points: 40.0
Start Date: 07-10-2013 End Date: 23-05-2014
Available for Online Enrolment?: Y Enrolment Restriction: Only available to students majoring in delivering department
Module Convenor: Dr S Homroy

Syllabus Rules and Pre-requisites

  • The following modules may not be taken:

Curriculum Design: Outline Syllabus

  •  

    PART I (WEEKS 1-3): Introduction, linear equations and graphs. Applications in Economics

     

    Lecture 1: Arithmetic operations and notation; powers and roots; operator precedence; fractions, ratios and percentages

     Lecture 2: Linear equations and their solution. Plotting linear equations.

     Reading:    Dewhurst, pp1-30; pp31-37; pp216-220

                     Begg pp23-24

     Workshop 1: Using basic arithmetic and linear equations in economics

     Lecture 3: Determinants of demand; determinants of supply; plotting demand and supply equations.

     Lecture 4: Simultaneous equations and their solution.

     Workshop 2: Practising solving simultaneous equations with supply/demand and other economic models

     Lectures 5 & 6:  Comparative static analysis: assessing the effect on equilibrium of changes in demand and/or supply; the role of price elasticity of demand and price elasticity of supply in determining the size of the effects; goods tax; price ceilings and price floors

     Reading:    Dewhurst pp37-41

                      Begg chs 3 & 4

     Workshop 3: Assessing and comparing the effects of ad valorem and specific taxes on market equilibrium. The role of elasticities in determining the size of the effects.

     

    PART II (WEEKS 4-5): Non-linear and multivariate functions and their application in Economics

     Lecture 7: Quadratic functions and other polynomials; applications including production and cost functions

     Lecture 8: Hyperbolic functions; applications including demand, cost functions and isoquants

     Reading:    Dewhurst, Ch. 9

                      Begg ch 7

     Workshop 4: Using quadratic, polynomial and hyperbolic relationships in economics

     Lecture 9:  Exponential functions; applications in economics

     Lecture 10: Logarithmic and multivariate functions; applications in economics

     Reading:    Dewhurst, Ch. 9

                      Begg pp67-69; pp182-184; ch 32

    Workshop 5: Using exponential, logarithmic and multivariate functions in economics


    PART III (WEEKS 6-10): Marginal analysis in Economics

     Lectures 11?14: Marginal analysis and differentiation. Slope of function. Rules of differentiation. Marginal functions (marginal revenue, marginal cost). Relationship between Marginal-Average Revenue under monopoly and perfect competition. Marginal product of labour. Diminishing marginal productivity. Derivative of exponential and logarithmic functions.

     Workshop 6-7: Practising derivatives. Revenue and Cost functions. Marginal propensity to consume, to save.

     Lectures 14?16: Introduction to elasticity. Price elasticity of demand/supply functions, elastic, inelastic, unit elastic.

     Workshop 8: Using calculus to calculate elasticity; examining empirical estimates of elasticity.

     Lectures 17-20: Optimization of economic functions. Stationary points, maximum, minimum. Use stationary points to sketch graphs of economic functions. Production function. Maximize profits, productivity. Maximize profits with/without price discrimination.

     Workshop 9: Profit maximisation. Maximize revenues when taxes are considered. Utility maximisation.

     Workshop 10: How firms price in practice. Price discrimination.

     Reading:

    Dewhurst, Ch. 10

    Begg, Fischer and Dornbusch, Ch 3, Ch 4, 5, 6, and 10 pp. 163-168.

    Sloman, Ch. 7, pp191 ? 196; Ch8, pp216-218

    Parkin, M., M. Powell and K. Matthews 'Economics', Addison-Wesley (4th ed), Ch. 13, pp302-307.

    Griffiths and Wall, Ch9.

     

    PART IV (WEEK 11): Effective Career Planning for Economics Students

     Lecture 21: The graduate labour market ? what do employers want? Identifying employability skills. Career management theory and models. Economics graduates in the labour market.

    Lecture 22: Introduction to the recruitment process (C.V., application forms, interviews, psychometric testing, assessment centres). Self awareness and skills appraisal. Goal setting and action planning. (Also: sign-up to a week 12 Employability Workshop session.)

     Workshop 11: Study skills and revision session for Basic Quantitative Methods Test #2

     
    PART V (WEEKS 12-14):  Data collection, presentation and analysis in Economics

    Lecture 23: The meaning and nature of statistics; sampling and data collection

    Lecture 24: Presenting and describing small and large datasets. The Lorenz curve

    Reading:    Dewhurst, Ch. 4

    Workshop 12: Constructing questionnaires; finding and providing a critical appraisal of tables and graphs

    Lecture 25: Measures of location and measures of variation

    Lecture 26: Applications with Excel; price indices; RPI; real and nominal data

    Reading:    Dewhurst, Ch. 4

                      Begg pp18-19

    Workshop 13: Data sources; price indices; real and nominal data

    Lecture 27: Scatter plots; correlation; estimating linear relationships

    Lecture 28: Interpretation of least-squares linear regression; goodness of fit; prediction.

    Reading:    Dewhurst, Ch. 8

                      Begg pp22-23

    Workshop 14: Estimating and interpreting lines of best fit in Economics


    PART VI (WEEK 15): Economics of the housing market

    Lecture 29: The filtering model of the housing market. The hedonic housing model.

    Lecture 30: The demand for housing. Rent control. Trends in UK house prices.

    Reading: McDonald and McMillen, Urban Economics and Real Estate, Chapter 9, 11

    Exercise: Comparative statics of the housing market

    Reading:

    Barrell, R., S. Kirby and R. Riley (2004), "The current position of UK house prices", National Institute Economic Review, 189 (July), can be found at:

                      http://ner.sagepub.com/cgi/reprint/189/1/57

    Nickell, S. (2005), "Practical issues in UK monetary policy, 2000-2005", British Academy Keynes Lecture in Economics, can be found at:

                      http://www.britac.ac.uk/pubs/src/keynes05/index.html

    OECD (2006), "Recent house price developments: The role of fundamentals", OECD Economics Department Working Papers No. 475, can be found at:

                      http://www.olis.oecd.org/olis/2006doc.nsf/linkto/ECO-WKP(2006)3   

    The Economist: Several articles:

    http://www.economist.com/world/britain/displaystory.cfm?story_id=7117985  

    http://www.economist.com/finance/displayStory.cfm?story_id=4079027  

    http://www.economist.com/opinion/displayStory.cfm?story_id=4079458   

    http://www.economist.com/displaystory.cfm?story_id=1794873  

     

    PART VII (WEEK 16-17): Models for finance and accounting

    Lecture 31: Arithmetic and geometric progression I

    Lecture 32: Arithmetic and geometric progression II

    Lecture 33: Arithmetic and geometric progression III

    Reading:

    Dewhurst Chapter 12

    Exercise: Arithmetic and geometric progression

     

    PART VIII (WEEK 17-18): The Group Project. Intertemporal Consumption

    Lecture 34: Carrying out an empirical project.

    Exercise: Trends in the UK housing market

    Lecture 35: Intertemporal consumption I

    Lecture 36: Intertemporal consumption II

    Reading: N Gregory Mankiw, Macroeconomics, 6th Edition (2007) Chapter 16.

    Exercise: Intertemporal consumption


    PART IX (WEEKS 19-20): Economic growth

    Lecture 37: The Solow growth model: Basics

    Reading: N Gregory Mankiw, Macroeconomics, 6th Edition (2007) Chapter 7.

    Exercise: Solow growth model: Comparative statics

    Lecture 38: The Solow growth model: Population growth, technological progress.

    Lecture 39: Growth empirics and growth accounting

    Reading: N Gregory Mankiw, Macroeconomics, 6th Edition (2007) Chapter 8.

    Exercise: Analysis of data from Mankiw, Romer and Weil (1992).

    Lecture 40: Group Project Presentations.

Curriculum Design: Pre-requisites/Co-requisites/Exclusions

  •  

    Compulsory for which categories of student:

     

    Economics majors.

     

    Optional for which categories of student:

     

    Combined majors with Economics.

     

    Entry requirements to the particular course:

     

    N/A.

     

    What must be taken with the course (the co-requisites):

     

    ECON 101/102.

  • 50% Exam
  • 50% Coursework

Assessment: Details of Assessment

  •    

    Course assessment:

      

    Test 1 (Michaelmas): 12%

    Test 2 (Lent): 12%

    Group Project: 16%

    Final exam (3 hours): 60%V

Educational Aims: Subject Specific: Knowledge, Understanding and Skills

  • Course aims and objectives:

    The aim of this course is to integrate elementary economic theory, mathematical and statistical methods and the interpretation of data to analyse applied economic issues of current policy importance. A particular purpose of the Basic Quantitative Methods component (weeks 1?10) of the course is to provide students with an introduction to the basic tools of mathematics essential for a proper understanding of economics and business courses within the Management School. In addition to supplying students with key techniques used in the remainder of this course, this first component of the course is designed to equip students with the quantitative skills required for second year quantitative methods in Economics and needed to make good progress in the intermediate microeconomics and macroeconomics courses.

    The second component of the course on Applied Economics (weeks 11?20) is intended to provide the students with the opportunity to practice the application of the analytical and quantitative skills developed during weeks 1-10 through the medium of selected topics that are developed and analysed in depth. Additionally, a separately-assessed segment on Effective Career Planning for Economics Students is also incorporated into the Applied Economics component of the course. This sits naturally within a course on Applications of Economic Analysis and side-by-side with training in the use of analytical and quantitative techniques insofar as these skills are precisely what distinguish an economics major in the graduate labour market.

    Econ 103 instruction extends over 24 weeks. The bulk of the course is taught via lectures and tutorials. The Michalemas Term of the course (weeks 1?10) covers Basic Quantitative Methods comprising essential mathematical and statistical techniques required both in this course and in later Part II courses. The Lent Term of the course (weeks 11?20) covers topics in Applied Economics as well as Effective Career Planning for Economics Students. The Summer Term is set aside for group project work. In week 20 (the last week of  Lent Term) students will receive a briefing on research methods prior to the commencement, in the Summer Term, of work on their group projects (weeks 21?24) on applied topics of their own choice. For their projects, students will be supervised in groups of four by members of staff.

    Key skills:

    Students who successfully complete the course will have acquired the basic tools of mathematics and will be able to grasp simple concepts of statistics, index numbers, basic algebraic operations, factorisation, equations, arithmetic and geometric progression, time value of money and basic elements of differential calculus. In addition, students will be able to apply these techniques to basic economic problems involving project appraisal, IS-LM analysis, demand-supply analysis and marginal concepts. They will be able to utilise these techniques for analysis of contemporary economic problems and will be able to communicate this analysis in cogent report writing.

Learning Outcomes: Subject Specific: Knowledge, Understanding and Skills

  • Learning Outcomes:

    From the Basic Quantitative Methods part of the course, students should be able to understand a wide range of quantitative concepts. Students will become familiar with relevant mathematical tools which will help them cope adequately with advanced topics in quantitative methods.

    By the end of this course, students should have a knowledge and understanding of:

    Analytical methods, both theory and model based

    • Relevant mathematical and statistical techniques
    • Statistical data and their manipulation and presentation by verbal, graphical, mathematical and econometric means
    • The relevance of different theoretical approaches and particular quantitative methods to public policy and business problems
    • Engage in abstract thinking by extracting the essential features of complex systems to facilitate problem solving and decision-making
    • Engage in deductive and inductive reasoning to enhance problem solving and decision-making skills
    • Apply theoretical, historical and quantitative methods to the analyses of public policy problems
    • Understand and appreciate the use of fundamental mathematical methods in economic analysis
    • Plan and manage their time effectively in relation to deadlines whilst displaying individual initiative and enterprise
    • Conduct individual assignments and perform effectively in a group environment by demonstrating leadership and team-building qualities
    •  Demonstrate a logical argument, analyse and interpret data and evaluate alternative perspectives on the basis of objective reasoning
    • Communicate and present complex arguments in oral and written form with clarity and succinctness
    • Present, interpret and analyse information in numerical form
    • Work effectively both individually and within a team environment
    • The skills and aptitudes sought by those who employ graduates
    • Models of career management and how these apply in practice to the students themselves
    The use of a variety of sources of graduate labour market intelligence and careers information to identify a range of routes into graduate employment

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