90299 - PUBLIC ECONOMICS

Learning outcomes

At the end of the course, students will be able to recognize the main sources of market failure and assess the scope of public intervention in the economy. They will acquire basic knowledge of the functioning of the most important economic instruments in the hands of public authorities, such as taxation, deficit/debt, and fiscal policy, and will master cost-benefit analysis. A prerequisite is a basic understanding of the fundamentals of Microeconomics and Macroeconomics.

Course contents

PART 1 (Modulo 1)

1 Introduction

Reasons for government interventions. Market failures. Normative vs positive economics. Paternalism vs individual failures.

2 Fundamentals of Game Theory

Strategic interactions. Social dilemmas. Social Norms. Behavioral game theory. Advices for policymakers.

3 Public Goods

Environmental Public Games. Prisoner Dilemma with punishment. Threshold game with Public good. Chicken games. Altruism and Social Capital. Warm Glow. Theory and Class experiments.

4 Externalities

Different types of externalities. Health externalities. Applications to the tourism sector.

4.1 Internalising local and global externalities: different policy interventions. Cooperation in the local commons. Carbon taxes. International Environmental Agreements. Subsidising environmentally friendly products. Theory and Applications in the Field.

5 Further Insights on Environmental Policies: Climate change mitigation. Marginal abatement curves. Environmental Kuznets Curve.

 

PART II (Modulo 2)

1 Principal indices of public finance

Taxes and spending: descriptive statistics across Europe and US. Government budgeting.

2 Public Debt

Intertemporal budget constraints of governments. Conditions for debt sustainability. Recent Dynamics of Public Debt: an international comparison.

3 Taxation in Theory and Practice

Taxation in Europe and around the world

Tax inefficiencies and their implications for optimal taxation. Tax incidence.

The equity implications of taxation: income distribution, transfers, welfare programs

Taxes on labour supply, consumption, savings.

Tourism market and Taxation

Readings/Bibliography

Testi/Bibliografia

Part I: Jonathan Gruber, Public Finance and Public Policy, Last Edition, 2016, Worth Publishers, Chapter:1,2,6,7.

Chapters 4, 16, 20 from CORE Economics textbook: freely available at: https://www.core-econ.org/the-economy/book/text/0-3-contents.html . Assigned readings and lecture material.

Part II: Jonathan Gruber, Public Finance and Public Policy, Last Edition, 2016, Worth Publishers, Chapter:

4,18, 19, 20, 21.

Teaching methods

The course will be a combination of frontal lectures and student presentations.

Assessment methods

The exam is a written test of 60 minutes with multiple choices and open essay-style questions. It is based on 4 questions out of three (8 points each question) and 4 multiple choices (2 points each question).

Notes or other materials are not allowed.

Grading is as follows:

• <18 fail
• 18-23 pass
• 24-27 good
• 28-30 very good
• 30L excellent

Students can reject the grade obtained at the exam only twice. To this end, he/she must email a request to the instructor within the date set for registration. The instructor will confirm reception of the request within the same date.

Office hours

See the website of Emanuela Randon