"Public Finance" is the traditional name for the field of study that could now best be titled "Public Economics" or "The Economics of Government". This course examines allocative and distributional aspects of taxes and government expenditures in the United States. Emphasis is placed on the technical and economic analysis of programs and policies, but institutional description is also covered.

The prerequisites are Eco 110 and 111 (Principles of Economics – Micro and Macro). Eco 300 (Intermediate Microeconomics) is not a requirement, but students who have completed that course will find it easier to get a deeper understanding of this one.

The main text is Public Finance and Public Policy (Second Edition), by Jonathan Gruber (Worth Publishers, 2007). The accompanying website (see URL above) has some useful items, including review material and annotated internet references. Additional reading assignments may be made.

There will be two exams during the semester plus a final examination. Each exam carries equal weight. The exams will emphasize material that is introduced or reviewed in class. The exams are intended to assess your knowledge of the material and your ability to use the tools of analysis.

In addition to exams, other graded items (homework, quizzes, etc.) may be assigned during the semester. The total grading value of these items may range from zero up to the value of an exam.

The overall course grade will be based on the sum of point grades (rather than an average of letter grades) of the graded items.

Regular attendance is expected, but it is not factored into your course grade. Students are responsible for all material covered in class and for all announcements made in class or on the class website. Academic dishonesty will be dealt with as severely as possible.

Note: A small number of students enrolled in this course may be making oral presentations as part of their requirements for Eco398W (Discourse in Economics).

Outline

The following outline of topics and associated textbook reading may be modified. Chapter appendixes are not covered. Additional reading assignments may be made.

1. Introduction and Background

1.1. The Role of Government – Sec 1.1
1.2. Budget Analysis – Sec 1.2, Secs 4.1, 4.4, and Applications on pgs 111 and 371

2.1. Tools of Welfare Analysis – pgs 43-52
2.2. Public Goods Basics – Sec 7.1, pgs 183-185
2.3. Externalities Basics – Secs 5.1, 5.3

3.1. Tax Incidence – Secs 19.1, 19.2
3.2. Tax Inefficiencies and Optimal Taxation – Secs 20.1, 20.2

4.1. Tools of Tax Structure Analysis
4.2. The Individual Income Tax – Chap 18, Sec 23.2, pgs 714-716, pgs 619-620
4.3. Transfer and Estate Taxation – Sec 23.3
4.4. Corporate Taxation – Secs 24.2, 24.3

5.1. Social Welfare and Optimal Income Taxes – pgs 52-54, Sec 20.3
5.2. Income Distribution and Distributional Effects of Taxes – pgs 480-482, Sec 19.4
5.3. Fundamental Tax Reform – Secs 25.2, 25.4

6.1. Tools of Behavioral Analysis – Sec 2.1
6.2. Labor Supply Responses – Secs 21.1, 21.2
6.3. Savings Incentives and Responses – Chap 22

7.1. Insurance and Social Insurance Basics
7.2. Social Security – Chap 13
7.3. Income Support Programs – Secs 17.2, 17.3, Sec 21.3

Last modified: 21 January 2008

Index of Course Materials for Eco 355