Term 2

Module leader

Kimberley Scharf & Michaela Redoano

Aims

The module applies methodology learnt in core modules to application in the fields of Political Economy and Public Economics. This course is concerned with understanding the role of government in the economy through taxation and expenditure. This course will cover both the classic topics in this area, such as the provision of public goods, externalities and the design of taxation, as well more modern themes. First, we will look at the political economy approach to public finance, which stresses that governments are not benevolent dictators, but take decisions via a political process, and thus may themselves take inefficient decisions. Second, due to globalization, the international dimension in government decision-making is becoming more important, especially on the tax side, with issues of mobile tax bases and tax competition and yardstick competition. .

Learning outcomes

Be able to understand basic microeconomic and game theory tools and be able to understand their applications in public economics settings.

Be kept abreast of latest developments in the area and tools for analysis so as to be able to understand theoretical and empirical applications and policy implication.

Syllabus

Topics to be covered:

• Principles of public economics. Welfare analysis; concepts of fairness, equity and efficiency; social welfare.
• Policy design. Commodities and income taxation. Public goods and externalities.
• Selected topics in political economy and public economics. Political Competition, voting behaviour and policy outcomes. Political Institutions and economic policy.
• International aspects of public economics. Fiscal interactions among jurisdictions: tax and yardstick competition
  

Organisation

Two-hour weekly lectures. Please see Teaching Timetable.

Pre-requisites

Key readings

Most of the readings will be in the form of journal articles, but some use will also be made of the following texts, handouts will be handed in during the lectures:

A B Atkinson & J E Stiglitz, Lectures on Public Economics, McGraw-Hill, 1980;

G Myles, Public Economics, Cambridge University Press, 1995.

Persson, T. and G. Tabellini, Political Economics: Explaining Economic Policy, MIT Press, 2000.

Besley, T., Principled Agents: Motivation and Incentives in Politics, Oxford University Press, 2006.

Assessment

For 18-CAT Students: Two hour final written exam in May (100%)

For 20-CAT Students (MA Public Policy Students): Two hour final written exam in May (90%) plus one presentation administered by PAIS (10%).