Spectroscopic studies of AGN are powerful means of probing the physical properties of the ionized gas within them. In particular, forthcoming facilities such as JWST and the E-ELT, will provide rest-frame ultraviolet and optical spectra of the very distant AGN. To lay the groundwork for the interpretation of the revolutionary datasets, we have recently computed new photoionization models of the narrow-line emitting regions (NLR) of AGN and combined them with similar models of the nebular emission from star-forming galaxies. In this talk, I will first describe how new ultraviolet and standard optical spectral diagnostics allow one to distinguish between nuclear activity and star formation. I will then present how the nebular emission from both young stars and AGN can be coupled with a new set of cosmological hydrodynamical zoom-in simulations of massive galaxies to achieve a better understanding of black hole growth and galaxy evolution with cosmic time. I will also present an innovative Bayesian fitting code that can help us best interpret current, and future, spectro-photometric data on active galaxies. In particular, the implementation of AGN photoionization calculations within this fitting tool allows us to better understand the physical properties of the AGN NLR gas. I will conclude showing some results from a recent analysis on one of the most comprehensive set of optical spectra (from VIMOS/VLT) sampling the rest-frame ultraviolet range of ~90 type 2 AGN (1.5 < z < 3), drawn from the z-COSMOS deep survey.