Empirical SFC Modelling

A semester of courses and project work at graduate level (30 ECTS)

 

Overall presentation

This comprehensive semester program provides students with the theoretical foundations and practical skills needed to develop and analyse empirical Stock-Flow Consistent (SFC) models.

It is possible to attend the course online. The semester is structured in two distinct phases:

• During the first phase (September to mid-October), students simultaneously attend the intensive foundational modules 1, 2 and 3 (5 ECTS each) to acquire the knowledge required for empirical SFC modelling.
• Following the autumn break, the second phase (late October to early January) consists of an extensive project (module 4) where students apply their knowledge in creating and validating their own empirical SFC model, culminating in final examinations at the end of January.

Module 1: Principles of Stock-Flow Consistent Models (5 ECTS)

This course is designed to introduce students to the core concepts and techniques of SFC modelling within the context of a monetary economy. The course content begins by familiarizing students with the principles of SFC models, emphasizing their importance in ensuring consistency between stocks (e.g., wealth, debt) and flows (e.g., income, expenditure) over time. As the course progresses, students will learn how to connect the SFC matrices to the system of national accounts, building a set of equations that represent the financial and real transactions between different sectors of the economy.

The modelling of institutional agents (households, firms, government, and banks) is covered in detail, providing students with a comprehensive understanding of how each sector interacts within an SFC framework. Students will also develop practical skills in calibrating, solving, and simulating theoretical models, allowing them to analyse economic dynamics under different scenarios. The pedagogy combines theoretical lectures with hands-on modelling exercises, culminating in the use of SFC models for policy analysis and scenario planning, equipping students with the tools to apply these models in real-world economic contexts.

Module 2: National Accounts and Economic Data (5 ECTS)

This course is designed to provide a comprehensive understanding of the system of national accounts (SNA), the data it generates, and its significance for macroeconomic modelling. The course progresses from a foundational introduction to the structure of national accounts, helping students understand the assumptions and criteria that underpin the compilation of these data and how these factors influence their use in economic models. Students will explore the relationships between key national economic variables and those at the sectoral and industry levels, gaining insights into how national accounts bridge the real and financial sides of the economy, particularly in the context of a monetary economy.
Through hands-on data exercises, students will develop proficiency in using national accounts data for economic analysis and policy evaluation. The course emphasizes practical skills in manipulating raw economic data, preparing it for use in economic modelling to ensure its accuracy and relevance for various analytical purposes. The pedagogy combines theoretical instruction with practical data analysis, encouraging students to apply their knowledge to real-world economic issues.

Module 3: Time Series Analysis (5 ECTS)

This course teaches methods and techniques required for utilizing time series data. The module is organized as an interaction between theoretical understanding and practical application. The module starts with covering basic univariate time series models used for forecasting. Afterwards, the module teaches various multivariate time series models, aimed at exploring dynamic relationships. The module builds the research foundation of students, which enables them to conduct research of empirical nature.

Upon completion of this course students are expected to be able to deal with real world time-series. They are expected to be able to find relevant data, identify important patterns in the data, and then perform various econometric applications. They are expected to be able to formulate an appropriate empirical model, estimate its parameters, test hypothesis, and evaluate the model.

Project-module 4: Empirical SFC Modelling Project (15 ECTS)

The project module provides students with a structured environment to apply their theoretical knowledge in developing a complete empirical SFC model. Through a series of lectures and associated workshops, students work in groups to progressively build their models under the guidance of an assigned supervisor. The module follows a systematic approach to model development, beginning with scope definition and proceeding through data collection, equation specification, and model validation. Each step is supported by dedicated lectures and workshop sessions where groups can present their progress and address challenges.

The project is structured around eight key stages:

1. Defining the scope of the model
2. Building the database
3. Defining the system of equations and matching them with data
4. Building the exogenous model
5. Estimating the behavioural equations
6. Incorporating the estimated equations into the model
7. Generating and validating a baseline model
8. Building and analysing scenarios

Throughout the project, students will learn to prepare and generate essential data, fill gaps in statistical information, ensure stock-flow consistency, and incorporate econometrically estimated behavioural equations. The workshop-style sessions facilitate peer learning and provide opportunities for feedback and problem-solving. Each student group works under the guidance of a supervisor who provides regular support and feedback throughout the development process.

Create your own exchange course in Economics (Fall semester)

An exchange course consists of 30 ECTS, and must include 1 project module. 

International students can choose between 2 project modules and between 11 course modules. You must choose 1 project module and 2 or 3 project modules corresponding to 30 ECTS all together.

 

Project modules

Choose between:

• Empirical SFC Modelling incl. project (9th semester, 15 ECTS) 
• Social Data Science semester project (9th semester, 15 ECTS)

Course modules

Choose between:

• Time series analysis (9th semester, 5 ECTS) 
• The principles of SFC modeling (9th semester, 5 ECTS)
• National Accounting and Macroeconomic Data (9th semester, 5 ECTS) 
• Natural Language Processing and Network Analysis (9th semester, 5 ECTS)
• Development Economics and Geopolitical Economy (7th semester, 5 ECTS
• Financial Econometrics (7th semester, 5 ECTS)
• Ecological Economics (7th semester, 5 ECTS)
• Real estate finance and investments (7th semester, 5 ECTS)
• *Socio-economic Issue (7th semester)
• Econometrics III: Time Series Data ( (7th semester, 5 ECTS)
• Introduction to Data Handling, Exploration & Applied Machine Learning (9th semester, 10 ECTS)

 

*Course descriptions

Module: Socio-economic Issue (7th semester, 5 ECTS)

This module allows students to take a closer look at a current socio-economic issue.
In the previous semester, the instructor and students discuss which themes could be relevant and interesting.

Learning Objectives

KNOWLEDGE

The goal is that the student, after the module, has knowledge of:

• Scientific issues within the socio-economic field and can identify these.
• The economic theories relevant to the issue.
• The advanced learning styles and processes that motivate their own learning both individually and/or in a group context.

SKILLS 
The goal is that the student, after the module, has skills in:

• Applying economic theory, methods, and tools to specific issues from an empirical or theoretical standpoint at an advanced level.
• Selecting and using relevant methods and tools to generate knowledge about an issue within a socio-economic problem in collaboration with external parties, including a supervisor, from an empirical or theoretical standpoint.
• Preparing a written and oral presentation of the project’s issue, method, analysis, and conclusions in a scientific, clear, and correct language.

COMPETENCIES
The goal is that the student, after the module, has competencies to:

• Identify and formulate objectives within socio-economics and be able to present and discuss the contextual factors that affect the realization of these objectives.
• Develop understanding and solutions to a central socio-economic issue based on scientific analyses at an advanced level.
• Independently initiate and carry out professional and interdisciplinary collaboration and take on professional responsibility.

Empirical SFC Modelling

A semester of courses and project work at graduate level (30 ECTS)

The course consists of the project module and two course modules. It is possible to attend the course online. 

Project module (10 ECTS)

Existing and Emerging Trends within Economy

 

Course modules (20 ECTS)

Choose between:

• Development Economics and Geopolitical Economy (5 ECTS)
• Financial Econometrics (5 ECTS)
• Ecological Economics (5 ECTS)
• Real estate finance and investments (5 ECTS)
• *Advanced Finance (10 ECTS)
• *Financial Unstability and Financial Crisis (10 ECTS)

 

*Course descriptions

Module: Advanced Finance (8th semester, 10 ECTS)

The module builds on the introductory finance theory from previous semesters, and through the module, the student will develop an understanding of the basis for fixed income analysis, including effective interest rates and concepts within the term structure of interest rates.

The student is introduced to introductory risk management in the form of duration, convexity, factor models, value-at-risk, and expected shortfall. Furthermore, the student will work with existing and emerging trends in advanced finance to build an understanding of interest rate derivatives such as forwards, swaps, futures, and options, convertible bonds, and term structure models.

Learning Objectives

KNOWLEDGE

The objective is that the student after the module possesses the necessary knowledge on:

• Theoretical as well as practical pricing of convertible and non-convertible bonds and interest rate derivatives.
• Risk measures for bonds.
• And be able to explain differences and similarities between methods in advanced finance, including being able to implement and account for theoretical pricing.
• Pricing of derivatives on interest rate products using analytical solutions.

SKILLS

The objective is that the student after the module possesses the necessary skills in:

• Theoretically distinguish and be able to explain differences and relationships between key trends and concepts related to pricing processes.
• Use numerical methods to calculate financial problems, including computer-generated paths for interest rate developments for pricing financial products.
• Read program code and adjust program code in solutions.

COMPETENCIES

The objective is that the student after the module possesses the necessary competences in:

• Practically implementing bond pricing.
• Communicating their insights into IT-developed solution methods through presentations.
• Critically evaluating the validity and precision of solutions from IT solution methods.

 

Module: Financial Unstability and Financial Crisis (8th semester, 10 ECTS)

Through this module, the student will gain insight into how the financial and economic crisis has posed a number of explanatory challenges to modern macroeconomic theory: how could the financial crisis arise without any warnings? How did a crisis in the financial sector propagate into a real economic crisis?

During the module, the student is introduced to how financial crises can arise. This is done by looking at both historical crises and establishing a theoretical foundation that explains how crises can occur. In addition to examining how financial crises can arise, the link between the financial side of the economy and the real side will also be explored: how does a financial crisis propagate into a real economic crisis?

Based on knowledge and theories about both historical crises and the current crisis, the causes of the crises will be discussed, as well as the possibilities for overcoming the crises.

Learning Objectives

KNOWLEDGE

The objective is that the student after the module possesses the necessary knowledge on:

• how financial crises can arise
• how financial instability can occur.
• how financial instability can spread to the real side of the economy.

SKILLS

The objective is that after the module the student has skills to:

• highlight the link between the financial side and the real side of the economy.
• explain and identify warning signs for an economy.

COMPETENCIES

The objective is that the student after the module possesses the necessary competences in:

• set up and understand financial models.
• assess and discuss how an economy can recover from a crisis.

The Economics master level exchange course semester is open to all master students with relevant academic backgrounds. You should meet the following entrance qualifications to be accepted as a student on the Economics master level semester:

• You must have successfully completed a bachelor degree within Economics. 
• You must be proficient in English orally and in writing, as the major part of the lectures and workshops are based on dialogue in class and due to the fact that written assignments will be in English as well. Therefore you are expected to be able to communicate orally and understandable in English. Find the requirements How to apply for guest and exchange courses - Aalborg University

We recommend you to apply as soon as possible due to formalia connected to the enrollment process. We accept student in the following categories:

• International students not enrolled at Aalborg University
• Danish students not enrolled at Aalborg University