ECON 503(F) Public Finance

Public finance is the branch of economics concerned with government expenditure and taxation, focusing primarily on microeconomic aspects of these activities. It provides tools for understanding the effects of government policies, as well as a useful conceptual framework for analyzing normative questions such as "what is a good policy?" This seminar will present the basic principles for public finance, and apply them to topics of particular importance in developing countries. The course will begin by considering the efficiency of market economics, and rationales for government intervention in the market, such as public goods, externalities, information-based market failures, and equity. Applications include environmental policy, education, health care, aid to the poor, and social security. We then move on to the economics of taxation, considering what kinds of taxes are used in developing countries, the economic and distributional effects of taxation, questions of administration and evasion, and options for reform such as the value added tax. Time permitting, we may also address topics such as pubic enterprises, political economy, and decentralization. Format: lecture/discussion. Requirements: problem sets, two short papers, 10-page final paper, midterm, and a final exam. Prerequisites: Economics 251 and 252. Undergraduate enrollment limited and only accepted with instructor's permission.