An introduction to dynamic fiscal policy in political and international economies
Date:
14/01/2026 - 11/02/2026
Organised by:
University of Essex
Presenter:
Dr Andreas Mueller, Senior Lecturer in Economics at the University of Essex, Research Affiliate at the Centre for Economic Policy Research and Professor of International Economics at the University of Basel
Level:
Advanced (specialised prior knowledge)
Contact:
Description:
The primary objective of the course is for students to acquire the necessary tools for modern macroeconomic analysis. This requires close study and understanding of recent research outputs. For some topics we will rely upon some advanced mathematics or quantitative methods (especially, dynamic programming), which will be explained in class as we go along.
In this research-oriented course, we will study normative and positive aspects of dynamic fiscal policy, with a particular focus on government (or, sovereign) debt accumulation.
After a brief introduction to solving dynamic recursive macro models using the software Matlab, we look at fiscal policy chosen by governments that:
(i) face political economy distortions, i.e., cannot commit beyond the current tax, expenditure, and debt policies;
(ii) are subject to limited commitment, i.e., may strategically choose not to honour the outstanding international debt obligations.
Specifically, we will look at:
1. Solution methods for dynamic economic problems: value function iteration, time iteration, function approximation.
2. The political economy of government debt accumulation.
3. Sovereign debt and default.
Upon successful completion of this course, students will have acquired a grasp of the main issues, theories, and tools in dynamic fiscal policy. In particular, they will be able to critically assess the role of macroeconomic policy in the short and long-run.
Required Reading
- Miranda M. and P. Fackler (2002): Applied Computational Economics and Finance, MIT Press.
- Alesina A. and A. Passalacqua (2016): The Political Economy of Sovereign Debt, Handbook of Macroeconomics, Vol. 2B, Chapter 33, Elsevier.
- Aguiar M. and M. Amador (2014): Sovereign Debt, Handbook of International Economics, Vol. 4, Chapter 11, Elsevier.
Course attendees are responsible for arranging their own access to the course readings.
Learning and teaching methods
The course will consist of one 2-hour lecture and one 2-hour practical class per week, over 5 weeks. The practical class will be computer based. During these classes we will go through computational problems that arise from the lecture materials. Assessment will be based on 2 pieces of coursework. These will typically, but not necessarily always, be based on analytical and computational problems related to the material discussed in the lectures and classes.
Cost:
Free
Website and registration:
Region:
East of England
Keywords:
Quantitative Data Handling and Data Analysis, Econometrics, ICT and Software, Quantitative Software
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