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Public
Economics Web Syllabus and Notes Econ 441 WVU, Fall 2021 Professor Roger D. Congleton |
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Office: 405
B&E / Office Phone: 304.293.7866 Office Hours: W and Th - 2:30-3:30 and by appointment E-Mail: roger.congleton@mail.wvu.edu (the most reliable contact method) Website: rdc1.net |
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Suggested Texts:
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PDF Syllabus |
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Holcombe, R. (2005) Public Sector Economics: The
Role of Government in the American Economy. NY:
Prentice Hall.
Hillman, A. L. (2019) Public Finance and Public Policy, Responsibilities and Limitations of Government. (third edition) Cambridge: Cambridge University Press. (Either the first [AH1] or second edition [AH2] is fine. AH3 below refers to chapters in the third edition, AH2 to chapters in the second edition.) |
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Main Text: |
Online Class Notes: The
most recent versions are available via this website,
backups available at the course's WVU E-Campus site
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Date |
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8/19, 8/24 |
Introduction:
Why Study Public Economics? Growth of Government and
Taxation in the United States and OECD countries, changing
composition of, increasing centralization and regulation.
Methodology
of Public Economics: Positive and Normative
Analysis. Positive and normative analysis in
public economics: Cost-Benefit Analysis, the Pareto
principles. The rational choice approach to choice and
social science.
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8/24, 8/26 |
Review of
Economic Tools: The Net Benefit Maximizing
Model of human choice, applied to demand and
supply, consumer surplus and profit, efficiency of
competitive markets. E-campus
quiz
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Part I: Market Responses to
Government Policies |
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8/31, 9/2 |
Principles
and Effects of Taxation: 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. Tax
Data: Overviews (WP table of effects of Taking
Stock
of Recent Economic Policies (WSJ, Schultz et al) E-campus quiz
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H: 2, 10, 11, 12, 13 AH3: 1, 8 AH2: 4.1, 4.2, and 9.1 US Tax History / Wiki State Tax Burdens |
9/7, 9/9 |
Principles
and Effects of Subsidies: Impacts of subsides
on market equilibria, deadweight losses in the long and
short run, conditional marginal and lump sum subsides.
Normative issues. Applications: farm subsidies, food stamps,
rent subsidies, public education, and unemployment
insurance. Data
from
the Statistical Abstract of the United States |
H: 5, 8 AH3: 2.1, 5.2 AH2: 2.1, 5.1 |
Part II: Market Failures to
Maximize Social Welfare in Particular Markets and
Governmental Solutions |
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9/14, 9/17 |
Why Governments are Useful: Externality Problems and Solutions. Externalities and Market Failures, Coasian Contracts, Pigovian taxes and subsidies. Applications: noise, air and water pollution, global warming, pandemics. Are Carbon taxes Pigovian taxes? E-campus quiz |
H: 4, 5
AH3: 3, 4
AH2: 3.1, 5.1, 5.2, 5.3 |
9/21 | Discussion and Review for the First Exam |
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9/23
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First Examination
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9/28 |
Exams returned and Reviewed |
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9/30, 10/5 |
Why Governments are Useful: Public Goods and Solutions. Public and Private Goods, the free rider problem; Pareto optimal supply of public goods, Samuelsonian and Lindahl Taxes; Consensus-inducing property of Lindahl taxes. The demand revelation problem.. Applications: gasoline taxes as Lindahl taxes, use fees and national parks, air quality, national defense, gravity. E-campus quiz |
H: 4, 5
AH3: 3, 4
AH2: 1.1, 3.1, 5.1, 5.2, 5.3
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10/7-10/8 |
Fall Break |
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Part III: Public Policy
Formation in Democracies |
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10/12, 10/14, 10/19 | Policy Making in Democratic Polities: The Electoral Demand for Public Goods and Taxes. The median voter model and the demand for public services. Convergence to median voter ideal point(s). Dynamics of public policy caused by changes in median voter circumstances or knowledge. Rational ignorance and fiscal illusion. Government Failures. E-campus quiz |
H: 7
AH2: 6.1, 6.2 |
10/21 |
Interest
Groups and Public Policy: Olson's Model of
Collective Action, Stigler's Capture model, Rent-Seeking
Losses, Bureaucracy as a Special Interest Group. Why are
some groups more influential than others?
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AH3: 1.4,
2, 12, B.2
AH2: 2.1, 2.2, 2.3 |
10/26, 10/28 |
Public
Finance and Relationships Between Governments:
Fiscal Federalism, Decentralized Policy Making,
Intergovernmental externalities, Conditional grants,
Revenue sharing. The Tiebout Model of intergovernmental
competition: voting with one's feet, Yardstick
competition. Applications: the decentralization theorem,
subsidiarity principle, capital flight. (Pew
on
Central Gov as Source of State Revenues.) E-campus quiz
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H: 24 AH3: 9.1 AH2: 9.3 |
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Paper Topics |
11/2, 11/4
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The Welfare State: Social
Security and Medicare. Application of tools
developed in the course to analyze OASDI: nature of tax,
the tax burden(s), as subsidies for retirement and
healthcare, the median voter model and average benefit
levels. History of OASDI, the lock box myth, future of
program. Medicare grows faster than the retirement
benefits because of technological change, this makes its
future deficits more difficult to overcome. Aging of the
median voter and the electoral support for social security
and medicare.Future taxes and/or deficits. Supplemental
References and resources: Social Security Annual Report ,
Medicare
Annual
Trustiees Report, CBO.
OASDI
History, Medicare
Reforms, (Feldstein
on reform), OECD
healthcare spending
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11/9 | The Welfare State: Social
Insurance for Ordinary Voters. The demand for
private insurance. Cases in which the median voter prefers
tax-financed government insurance to private insurance.
Medicare and Obamacare (ACA). The simple politics of
governmental insurance programs. Subsidies vs government
provision of insurance services. OECD
healthcare spending Why
Doctors are Paid So Much (Man Inst) Data
on the Complexity of OECD healthcare systems |
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11/11 |
Review for Second Exam | Study Guide II |
11/16 |
Second Examination |
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11/18 |
Exams Returned and Reviewed |
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11/20-28 | Fall Recess/Thanksgiving Break | |
11/30, 12/2 |
Deficits Finance and Reform:
Debt Finance as Intertemporal
Taxation Government debt for
revenue smoothing, government debt as an inter-generational
transfer, government debt and fiscal illusion. Ricardian
equivalence, the politics of deficits and debt, Entitlement
deficits and national debt. Supplemental References and
resources: Revenues,
Expenditures, Deficits etc. (Plot of deficits as fraction of
GNP), GAO
deficit forecast, GAO debt
forecast] Some
Survey Evidence of Support for Reform |
AH3: 2.6, 5.7 H17 CBO Report 2014 CBO Report 2018 |
12/2 |
Paper Workshop |
Paper Format |
12/7 |
Forest From Trees Lecture |
Paper Topics |
12/17 |
Research Paper
Due at Midnight via Email (see Paper Topics for a
description)
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Institutional
Policies
and Services: Students
are
responsible for reviewing policies on
inclusivity, academic integrity, incompletes, sale of
course materials, sexual misconduct, adverse weather, as
well as student evaluation of instruction, and days of
special concern/religious holiday statements.
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Link to WVU
Policies and Syllabus Addenda
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