Macroeconomic Diagnostic Training Course

INTRODUCTION

This course on Macroeconomic Diagnostics (MDSx), you will learn some applied tools that will allow you to assess the economic situation in a country. These analytical tools are the ones most used by applied macroeconomists—including those at the IMF. You will learn both how to technically implement these tools and to interpret their results.

The course will guide you through the different sectors of an economy. It will present tools to assess the relevant sector and its vulnerabilities. These applied tools will be simple to apply and they will bring out the critical information that an economist needs to make an assessment.

Beyond the tools themselves, we’ll also be showing how to refine and interpret their output. We will be doing more than just plugging numbers into a spreadsheet formula. We will want to use the results of these tools – filtered through our judgement – to develop a narrative of a country’s economic situation.

To help you make this course more hands-on, you will be examining a case study country called “Diagnostica.” We will run through a series of sector-by-sector assessments. Along the way, we will be demonstrating how to apply the diagnostic by using different country examples. Then, you will be asked to perform that same exercise and interpret it for “Diagnostica.” Finally, we’ll be integrating our sectoral assessments into a comprehensive analysis known as a ‘risk assessment matrix’ or RAM. This will give us a sense of where the major risks and weaknesses lie in Diagnostica’s macroeconomic picture.

 How you benefit

• This course will strengthen participants’ ability to assess a country’s macroeconomic situation, emphasizing practical tools for use in day-to-day macroeconomic analysis.
• How to analyze potential output and calculate output gaps, identify expenditure composition of growth, measure inflation, and assess sources of inflation
• How to assess the stance of monetary and fiscal policy and interpret financial sector soundness and risk indicators
• How to analyze public and external debt sustainability, analyze the external position, and evaluate possible exchange rate misalignment
• How to assess the medium–term prospects of the economy including the sustainability of public and external debt, and identify impediments to long–term growth

Who should attend

Middle to senior level officials in Central Banks from Research, Bank Supervision, Financial Markets, Banking services and National Payments Systems departments and Finance Ministry.

DURATION

10 Days

COURSE CONTENT

Module 1: Review of Macroeconomic Fundamentals

• Recap of key macroeconomic indicators and concepts
• Understanding economic models and their assumptions
• Role of expectations in macroeconomic analysis

Module 2: Economic Growth Theories and Measurement

• Endogenous growth theories (Solow model, Romer model, etc.)
• Human capital and technological progress in growth
• Measuring and interpreting potential output and productivity

Module 3: Business Cycle Analysis

• Real business cycle theory
• Keynesian and New Keynesian perspectives on business cycles
• Empirical methods for identifying and analyzing economic recessions and expansions

Module 4: Monetary Policy and Inflation Dynamics

• Phillips curve in the short run and long run
• Rational expectations and adaptive expectations
• Role of central banks in controlling inflation expectations

Module 5: Financial Markets and Macroeconomic Linkages

• Asset pricing and risk premium models
• Macroeconomic implications of financial market frictions
• Analyzing the transmission of monetary policy through financial markets

Module 6: Fiscal Policy and Debt Sustainability

• Dynamic scoring of fiscal policies
• Overlapping generations models
• Intergenerational equity and public debt sustainability

Module 7: Open Economy Macroeconomics

• Exchange rate regimes and their implications
• Mundell-Fleming model and monetary policy in an open economy
• Terms of trade, current account dynamics, and external imbalances

Module 8: Macroeconomic Policy Coordination

• International spillover effects of policies
• Policy coordination and global economic stability
• Challenges in achieving coordinated policy responses

Module 9: Advanced Time Series Analysis

• Unit roots and cointegration
• Vector Autoregressive (VAR) models
• Impulse response functions and forecast error variance decomposition

Module 10: Advanced Case Studies and Research Projects

• Analyzing complex economic scenarios and policy challenges
• Independent research projects applying advanced diagnostics techniques
• Group presentations and discussions on cutting-edge macroeconomic issues

Prerequisites:

• Strong foundation in macroeconomic theory and analysis
• Proficiency in mathematical and statistical techniques used in advanced macroeconomics
• Prior exposure to DSGE models and other advanced economic modeling frameworks

Key Notes

a. The participant must be conversant with English.

b. Course duration is flexible and the contents can be modified to fit any number of days.

c. One-year post-training support Consultation and Coaching provided after the course.

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