Postgraduate taught 

Financial Economics MSc

Macroeconomics ECON5019

  • Academic Session: 2020-21
  • School: Adam Smith Business School
  • Credits: 20
  • Level: Level 5 (SCQF level 11)
  • Typically Offered: Semester 1
  • Available to Visiting Students: No
  • Available to Erasmus Students: No

Short Description

This course is compulsory for students studying for the MSc Financial Economics, and MSc International Trade and Finance. It concentrates on setting out the essential building blocks of modern macroeconomic theory by covering: the theory of firms and long-run growth; the theory of households and asset pricing; economic inequality at the macro-economic level; and household heterogeneity and the link between aggregate outcomes and inequality. The unifying approach adopted throughout is based on the principles that households maximise utility subject to their budget constraints; firms maximise profits subject to the demand for their product and costs of production; and prices adjust such that an equilibrium exists and markets clear. Finally, macroeconomic economic data will be introduced and discussed to help students to understand and assess the predictions of the theory.


One 2-hour lecture per week for 10 weeks.

One 90 minute revision lecture before the degree exam.

Excluded Courses



Summative Assessment will be conducted as follows:

1. A two-hour end-of-course examination (75% of final grade for course).

2. Two in-course group assessments (12.5% of final grade each).


The in-course assessments will be in the form of presentation/oral examination, which take place twice in the semester, weeks 6 and 10. These will be conducted as follows:

i) Students will be allocated into groups (the aim is for groups of 3 or 4, depending on student numbers). Each group will be given a topic to prepare and present to the lecturers of the course. The topics can relate to a modelling exercise, a discussion of an academic piece of work involving the material covered in the class, a topic requiring a literature review, or an analysis of the relevant data;

ii) During the course of each presentation, the groups will be asked questions by the lecturer;

iii) A grade will be allocated to each group, reflecting both analytical competence and economic understanding of the material. Moreover, formative feedback will be provided in the context of the mark.

iv) The first assessment will take place just after the first part of the course (i.e. covering material from lectures 1-5) and the second at the end (i.e. lectures 6-10);

v) Each presentation/oral examination will be allocated 20 minutes, with questions taking the examination to 30 minutes in total.

Main Assessment In: December

Course Aims

The aim of this module is to introduce modern macroeconomics with special emphasis on inter-temporal equilibrium models in economic environments with a representative household or different households. By the end of the course, students should be able to outline and derive the essential predictions of these models and understand the policy implications implied by them.

Intended Learning Outcomes of Course

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

• Understand the relationship between aggregate economic data and macroeconomic theory.

• Use the theory of the firm to explain the sources and causes of long-run economic growth in developed and developing economies.

• Using the tools of simple and constrained optimization, understand how to derive models of household behaviour both intra- and inter-temporally.

• Use the model of consumer behaviour to study the optimal supply of labour and the optimal allocation of income and assets to consumption and savings.

• Analyse how the theory of household savings relates to the theory of asset pricing and risk.

• Understand the role of household heterogeneity and how it may relate to economic aggregate outcomes and inequality.

• Evaluate the developments in the research relating to macro-inequality.

• Present, explain and evaluate (macro)economic models and research.

Minimum Requirement for Award of Credits

Students must submit at least 75% by weight of the components (including examinations) of the course's summative assessment.