EC950 Index: Graduate Public Finance

	Public Finance Econ 950 GMU, Spring 2011 Professor Roger D. Congleton
.	Syllabus
Texts:	Class Room: West 1001: 7:20 - 10:00	Snow News
	Hillman, A. L. (2003) Public Finance and Public Policy, Responsibilities and Limitations of Government. Cambridge: Cambridge University Press Tanzi, V. and L. Schuknecht (2000) Public Spending in the 20th Century: A Global Perspective. Cambridge: Cambridge University Press. Congleton, R. D. and B. Swedenborg (2006) Democratic Constitutional Design and Public Policy. Cambridge Mass: MIT Press.	Office Hours: Tuesday, 1:30-2:45, Wednesday 1:30-3:45 and by appointment
	Class Notes, available via this website, (will be updated during semester)

Date	TENTATIVE COURSE OUTLINE**	Readings
1/27	University post poned class for Pres Obama's Inauguration	Pres Approval Ratings (WSJ)
2/3	Introduction: Overview of fical policy in the United States and OECD countries: growth of tax and expenditures, composition of, increasing centralization. Theories of governmental action, the link between "optimal" expenditures and taxation. Welfare Economics: Positive and Normative Analysis: Positive and nomative analysis: the Pareto principles, Cost-Benefit Analysis, Rational choice as an application of cost-benefit analysis. (Geometrical Review)	AH: 1 T&S 2 GAO overview of US gov finance (report) US Statistical Abstract World Bank Statistics Dow and GNP qtr changes
2/10	Public Goods and Externalities: Public and Private Goods, the free rider problem; Pareto optimal supply of public goods, Samuelsonian,and Lindalh Taxes; Externalities and Market Failures, Pigovian taxes. Applications: national defense, clean air and water, highways, welfare	AH: 2.1, 2.2, 4.1, 4A, 4C
2/17**	Principles of Tax Analysis: Impact of taxes on market prices and output; deadweight loss in the long and short run; neutral taxes and excess burden; Ramsay taxation, progressive and proportional income taxes and the labor-leisure tradeoff. Applications: property taxes, excise taxes, head taxes, and income taxes. Normative Principles of Tax Analysis Theories of Optimal Taxation: Ramsay and Henry Georgian taxation (minimizing dead weight loss), Utilitarian: progressive and regressive taxation, neutral taxation, Contractarian theories of taxation (Buchanan and Rawls), Benefit Taxation (Lindalh), generality norms.	AH: 2E, 7.1 and 7.2 US Tax History Tax Data: Overviews AH 2,5,7
2/24	Principles of Expenditure Analysis and Debt: Impacts of subsides on market equilibria, deadwieght losses in the long and short run, conditional marginal and lump sum subsides. Applications: farm subsidies, food stamps, rent subsidies, public education, and unemployment insurance. Altruism, Ricardian neutrality, limits to inter-generational shifting of taxes, political biases favoring debt over taxes, Keynesian macroeconomics, crowding out, balanced budget amendments, redistribution. The Geometry of Expenditure Analysis.	AH: 2.1, 5.2 T&S 3, 5 Data from the Statistical Abstract of the United States OECD data on Debt
3/3	Public Finance and Relationships Between Governments: Voting with Your Feet (the Tiebout Model), Decentralization, Intergovernmental Externalities and Economies of Scale (an optimal federal system). Applications: decentralization, fiscal federalism, capital flight.	AH: 3.1, 3.2, 4.2 C&S 8 Mueller on Fed Study Guide I
3/10**	The Political Demand for Government Services (and Taxes): The median voter model and the demand for public services. The median voter model, bureaucracy as an interest group, interest groups, rent-seeking, fiscal illusion, and the jury theorem. Interest Groups and Public Policy: Economic and Ideological Special Interests and Rent-Seeking Losses	AH: 6.1, 6.2, 6.3, 6C, AH: 9.1
3/17	No Class / Spring Break	Paper Topics
3/24	Institutions and the Effective Demand for Government Services Aggregating Preferences and Intra-Governmental Bargaining. The effects of electoral systems, bicameralism, presidential and prime ministerial institutions on government expenditures, taxation and debt.	C&S 1, 3,11 T&S 8 The Growth of Government Services
3/24	Discussion and Review for the First Exam (last hour)
3/31	EXAMINATION (take home)
4/7	The Economic and Political Demand for Social Insurance: Is it all about security or transfers? Analysis of the political demand for economic, health, and longevity insurance. Has social insurance become the "main product" of Western democracy?	T&S 1 A Liberal Welfare State?
4/14	Applications to Contemporary Public Finance Issues: Overview of Social Security (notes) Paygo, Digressive taxation, Myth of the "Lock Box," The Future of Social Security (History)	AH: 5.1, 5B, 10.1, 10.B Rise of the Welfare State WHO on Healthcare
4/21	Applications to Contemporary Public Finance Issues: Overview of Taxation and Reform (notes), Decentralization, International Taxation and Growth, Future / Recent Tax Reforms (CBO analysis), Analsysis of Major Tax Reforms (US Treasury White Paper, 2002, O'Neill) History of Taxation in the US	AH: 7A, 7B, 7C Pres Bush's Panel on Tax Reform OMB-2009 Budget Proposal
4/28**	Applications to Contemporary Public Finance Issues: International Organizations as Public Goods Providing Clubs without Powers of Taxation	GEF Paper
5/2**	Paper Workshop (scheduled for Carow Hall 10:00 - 1:00)
5/5**	An Overview of Public Finance

5/12	14-20 Page research paper due midnight via e-mail on an applied public finance topic

	** Dates may be changed.

Public Finance
Econ 950
GMU, Spring 2011

Professor Roger D. Congleton

Syllabus

Texts:

Class Room: West 1001: 7:20 - 10:00

Snow News

Hillman, A. L. (2003) Public Finance and Public Policy, Responsibilities and Limitations of Government. Cambridge: Cambridge University Press

Tanzi, V. and L. Schuknecht (2000) Public Spending in the 20th Century: A Global Perspective. Cambridge: Cambridge University Press.

Congleton, R. D. and B. Swedenborg (2006) Democratic Constitutional Design and Public Policy. Cambridge Mass: MIT Press.

Office Hours:
Tuesday, 1:30-2:45,
Wednesday 1:30-3:45
and by appointment

Class Notes, available via this website, (will be updated during semester)

Date

TENTATIVE COURSE OUTLINE**

Readings

1/27

University post poned class for Pres Obama's Inauguration

Pres Approval Ratings (WSJ)

2/3

Introduction: Overview of fical policy in the United States and OECD countries: growth of tax and expenditures, composition of, increasing centralization. Theories of governmental action, the link between "optimal" expenditures and taxation.

Welfare Economics: Positive and Normative Analysis: Positive and nomative analysis: the Pareto principles, Cost-Benefit Analysis, Rational choice as an application of cost-benefit analysis. (Geometrical Review)

AH: 1 T&S 2
GAO overview of US gov finance (report)

US Statistical Abstract

World Bank Statistics

Dow and GNP qtr changes

2/10

Public Goods and Externalities: Public and Private Goods, the free rider problem; Pareto optimal supply of public goods, Samuelsonian,and Lindalh Taxes; Externalities and Market Failures, Pigovian taxes. Applications: national defense, clean air and water, highways, welfare

AH: 2.1, 2.2, 4.1,
4A, 4C

2/17**

Principles of Tax Analysis: Impact of taxes on market prices and output; deadweight loss in the long and short run; neutral taxes and excess burden; Ramsay taxation, progressive and proportional income taxes and the labor-leisure tradeoff. Applications: property taxes, excise taxes, head taxes, and income taxes.
Normative Principles of Tax Analysis Theories of Optimal Taxation: Ramsay and Henry Georgian taxation (minimizing dead weight loss), Utilitarian: progressive and regressive taxation, neutral taxation, Contractarian theories of taxation (Buchanan and Rawls), Benefit Taxation (Lindalh), generality norms.

AH: 2E, 7.1 and 7.2
US Tax History
Tax Data: Overviews

AH 2,5,7

2/24

Principles of Expenditure Analysis and Debt: Impacts of subsides on market equilibria, deadwieght losses in the long and short run, conditional marginal and lump sum subsides. Applications: farm subsidies, food stamps, rent subsidies, public education, and unemployment insurance. Altruism, Ricardian neutrality, limits to inter-generational shifting of taxes, political biases favoring debt over taxes, Keynesian macroeconomics, crowding out, balanced budget amendments, redistribution. The Geometry of Expenditure Analysis.

AH: 2.1, 5.2
T&S 3, 5
Data from the Statistical Abstract of the United States

OECD data on Debt

3/3

Public Finance and Relationships Between Governments: Voting with Your Feet (the Tiebout Model), Decentralization, Intergovernmental Externalities and Economies of Scale (an optimal federal system). Applications: decentralization, fiscal federalism, capital flight.

AH: 3.1, 3.2, 4.2
C&S 8 Mueller on Fed
Study Guide I

3/10**

The Political Demand for Government Services (and Taxes): The median voter model and the demand for public services. The median voter model, bureaucracy as an interest group, interest groups, rent-seeking, fiscal illusion, and the jury theorem. Interest Groups and Public Policy: Economic and Ideological Special Interests and Rent-Seeking Losses

AH: 6.1, 6.2,
6.3, 6C, AH: 9.1

3/17

No Class / Spring Break

Paper Topics

3/24

Institutions and the Effective Demand for Government Services Aggregating Preferences and Intra-Governmental Bargaining. The effects of electoral systems, bicameralism, presidential and prime ministerial institutions on government expenditures, taxation and debt.

C&S 1, 3,11 T&S 8
The Growth of Government Services

3/24

Discussion and Review for the First Exam (last hour)

3/31

EXAMINATION (take home)

4/7

The Economic and Political Demand for Social Insurance: Is it all about security or transfers? Analysis of the political demand for economic, health, and longevity insurance. Has social insurance become the "main product" of Western democracy?

T&S 1
A Liberal Welfare State?

4/14

Applications to Contemporary Public Finance Issues: Overview of Social Security (notes) Paygo, Digressive taxation, Myth of the "Lock Box," The Future of Social Security (History)

AH: 5.1, 5B, 10.1, 10.B
Rise of the Welfare State
WHO on Healthcare

4/21

Applications to Contemporary Public Finance Issues: Overview of Taxation and Reform (notes), Decentralization, International Taxation and Growth, Future / Recent Tax Reforms (CBO analysis), Analsysis of Major Tax Reforms (US Treasury White Paper, 2002, O'Neill) History of Taxation in the US

AH: 7A, 7B, 7C
Pres Bush's Panel on Tax Reform
OMB-2009 Budget Proposal

4/28**

Applications to Contemporary Public Finance Issues: International Organizations as Public Goods Providing Clubs without Powers of Taxation

GEF Paper

5/2**

Paper Workshop (scheduled for Carow Hall 10:00 - 1:00)

5/5**

An Overview of Public Finance

5/12

14-20 Page research paper due midnight via e-mail on an applied public finance topic

** Dates may be changed.