Public Economics

2019-2020

Course Objective

The objective of this course is to identify, justify, analyze and
evaluate public economic policy options. Using problem sets and
exercises, along with work on economic data will increase and deepen
understanding.

Upon completion of the course:

(i) Students understand theoretical underpinnings, mechanisms, and
functioning of policy tools in public economics, and they appreciate
empirical dimensions of government involvement and policy.
(ii) Students possess the relevant skills and master the choice and use
of appropriate empirical and modeling tools to address important public
economics questions in stylized and real-life cases and applications.
(iii) Students are able to positively assess and normatively evaluate
efficacy, effectiveness, equity, and efficiency of alternative economic
policy measures in light of set objectives and relative to desirable
social goals.

Course Content

Public economics (public finance) is concerned with the role of the
public sector (and in particular the government) in a market economy.
This course covers an array of topics central to economic policy making,
and will discuss underlying economic theory, but also embed it in the
context of empirical research on policy evaluation that has given new
impetus to public economic thinking.

Classic topics include the correction of market failure in the presence
of public goods (judicial system or national defence), as well as
distributional goals with which welfare state institutions are
concerned. We discuss welfare implications of taxation of incomes,
consumption, or wealth, implied by adverse incentive effects on economic
behavior. The central trade-off in public finance is that between the
dual goals of efficiency and equity, and we argue that government policy
is at most second-best relative to the goal overall maximization of
social welfare. The course will also reflect on behavioral public
finance aspects that point to limitations and challenges for economic
policy making when citizens are boundedly rational and may not react as
desired to public interventions. There may be a role for the government
as choice architect.

Problems triggered by asymmetric information constitute another central
aspect of modern public finance, and accordingly tools will be applied
to issues in social insurance design. In addition, the course will
discuss issues of public choice and political economy when discussing
strategic lobbying and rent-seeking, or institutional structures that
reflect the provision of local and interjurisdictional public goods
(fiscal federalism). We close with aspects of international taxation
(tax avoidance, evasion, and tax competition).

During the course both theoretical and empirical economic work in policy
context is discussed.

Teaching Methods

Lectures and seminars (active learning groups). Please not that
participation in the seminars (and possible guest lectures*) is
mandatory.
*In 2017/18 we also had a guest lecture on International Tax Avoidance
(as come to light through, e.g. Panama Papers and other leaks)

Method of Assessment

50%/50% midterm/final written exam - individual assessment; seminar
assignments (pass/fail)

Entry Requirements

Mandatroy courses PPE specialization Track 2: Economics

Literature

Rosen, H.S., and T. Gayer (2014), Public Finance, 10th Edition,
McGraw-Hill (ISBN: 0078021685)

Supplementary material from
Hindriks, J. and G. D. Myles (2013), Intermediate Public Economics, 2nd
edition, MIT Press.
Additional reading will be announced on Canvas.

Target Audience

Second year PPE students

Custom Course Registration

There is a slightly different enrollment procedure for this module. The standard procedure of the Faculty of Humanities has students sign up for (i) the module, (ii) the form of tuition (lecture and/or preferred seminar group), and (iii) the exam. However, for this module the instructor will assign the students to the seminar groups. Therefore, students should sign up for (i) the module, (ii) lecture and (iii) the exam, but not for the seminar groups.

Recommended background knowledge

Mandatory courses PPE specialization Track 2: Economics

General Information

Course Code W_JSM_220
Credits 6 EC
Period P4
Course Level 200
Language of Tuition English
Faculty Faculty of Humanities
Course Coordinator dr. S. Hochguertel
Examiner dr. S. Hochguertel
Teaching Staff dr. S. Hochguertel

Practical Information

You need to register for this course yourself

Last-minute registration is available for this course.

Teaching Methods Lecture, Seminar*

*You cannot select a group yourself for this teaching method, you will be placed in a group.

Target audiences

This course is also available as: