Economics 324: Public Finance

Course Description:

Public Finance is a course in the economics of the public sector. As such, it deals very much with social and political values. Two values on which we will concentrate are "equity" and "efficiency." We will assume that government's economic role should be to improve on the equity and efficiency of the market.

We will examine a range of public spending programs (eg, defense, environmental policy, welfare, social security) and taxes (eg, income taxes, consumption taxes, property taxes). In examining each program or tax, we will look at both economic theory and empirical research, to assess its (positive) economic effect. And we will consider whether this effect is good or bad, according to our (normative) standards of equity and efficiency.

We will (I hope!) disagree. A major concern will be to understand why. Are we disagreeing (i) because we hold different (normative) values, (ii) because we have different (positive) views of the way the world works, or (iii) because one of us is using faulty logic? The first two are both legitimate reasons for disagreeing. However, the positive disagreements can be reduced through further research; the normative ones ordinarily cannot.

This is decidedly an economics course. However, if you have background in a related discipline (political science, philosophy, tax accounting come immediately to mind), you are encouraged to contribute that perspective to our class discussions. Likewise, most of the institutional material relates to the US. However, if you have background in another country, you are encouraged to contribute that perspective. Exploit your comparative advantage!

Prerequisite: Econ 100

Grades determined by two hourly exams, a final exam, a term paper, and class contribution.