Please note: there may be some adjustments to the teaching arrangements published in the course catalogue for 2020-21. Given current circumstances related to the Covid-19 pandemic it is anticipated that some usual arrangements for teaching on campus will be modified to ensure the safety and wellbeing of students and staff on campus; further adjustments may also be necessary, or beneficial, during the course of the academic year as national requirements relating to management of the pandemic are revised.

Advanced Macroeconomics ECON4040

  • Academic Session: 2021-22
  • School: Adam Smith Business School
  • Credits: 15
  • Level: Level 4 (SCQF level 10)
  • Typically Offered: Semester 2
  • Available to Visiting Students: Yes
  • Available to Erasmus Students: Yes

Short Description

With the ultimate aim of understanding the causes and consequences of fluctuations in macroeconomic activity, this course sets out the micro-foundations of modern macroeconomic theory by analysing the optimising choices of households, firms and the government in the markets for goods, labour, capital and public bonds. This is achieved in a general equilibrium framework by examining the interaction in all markets simultaneously.


Lectures: 10 x 2-hour lectures

Seminars: 7 hours

Requirements of Entry

Entry to an Honours programme in Economics or a minimum grade C3 (average) in Economics 2A and 2B for students taking an Honours programme in another subject. Completion of Microeconomic Analysis and Macroeconomic Analysis in year 3 is also required.

Excluded Courses



ILO (covered)

Main Assessment In: December

Are reassessment opportunities available for all summative assessments? Not applicable for Honours courses

Reassessments are normally available for all courses, except those which contribute to the Honours classification. For non Honours courses, students are offered reassessment in all or any of the components of assessment if the satisfactory (threshold) grade for the overall course is not achieved at the first attempt. This is normally grade D3 for undergraduate students and grade C3 for postgraduate students. Exceptionally it may not be possible to offer reassessment of some coursework items, in which case the mark achieved at the first attempt will be counted towards the final course grade. Any such exceptions for this course are described below. 

Course Aims

The aims of this course are to:

■ Understand the causes and consequences of fluctuations in macroeconomic activity using a micro-founded theory which analyses the optimising choices of households, firms and the government in the markets for goods, labour, and capital.

■ Appreciate how each market interacts such that market clearing equilibrium prices and quantities can be solved for simultaneously.

■ Learn the mathematical, numerical and graphical tools to undertake the above analysis.

■ Apply the theoretical and analytical tools to a variety of real world examples including: productivity policy and growth; moral hazard and unemployment benefits; unemployment benefits as insurance; taxes and employment policy; savings rate; capital market regulation; and policies to foster capital market trade

Intended Learning Outcomes of Course

By the end of this course students will be able to:

1. Evaluate the objectives, constraints and endowments of representative and heterogenous households in intra- and intertemporal contexts.

2. Analyse the profit motives and technological constraints of representative and heterogenous firms using advanced macroeconomics models.

3. Critically assess the motives, constraints and consequences of government policy.

4. Critically analyse the similarities and differences, for the optimal allocation of resources, derived from the social planner's and the market's solutions to this problem.

5. Evaluate different analytical, graphical and numeric methods for solving both representative and heterogenous agent models.

6. Critically apply (via group work drawing on ILOs 1-5) the tools required to setup, solve and analyse the various general equilibrium models developed in this course. This will require group collaboration, delegation, presentation, organisation and hand-on learning by doing.

Minimum Requirement for Award of Credits