EC441 Index: Undergraduate Public Economics and Finance

	Public Economics Econ 441 WVU, Fall 2018 Professor Roger D. Congleton
.	Class room and time: B&E 428 4:00-5:15 Tuesday -Thursday
	Office: 405 B&E Phone: 304.293.7866 E-Mail: roger.congleton@mail.wvu.edu (the most reliable contact method) Website: rdc1.net	Office Hours: Wed.: 2:00-3:30, Thursday: 2:00-3:30 and by appointment
Suggested Texts:	Syllabus
	Holcombe, R. (2005) Public Sector Economics: The Role of Government in the American Economy. NY: Prentice Hall. Hillman, A. L. (2009/3) Public Finance and Public Policy, Responsibilities and Limitations of Government. (second edition) Cambridge: Cambridge University Press. (Either the first [AH1] or second edition [AH2] is fine. AH1 below refers to chapters in the first edition, AH2 to chapters in the second edition.)
	Class Notes, available via this website	Public Finance Links

Date	(Tentative) COURSE OUTLINE	Readings
8/12	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.	US Statistical Abstract World Bank Statistics H: 1, 2 / AH1: 1 AH2: 1.1 S1A, S1B Deficits (Fred) Size AEI
8/21	Review of Economic Tools: The Net Benefit Maximizing Model of human choice, applied to demand and supply, consumer surplus and profit.
8/28	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)	H: 10, 11, 12, 13 AH1: 2E, 7.1 and 7.2 AH2: 4.1, 4.2, and 9.1 US Tax History / Wiki
9/11	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 AH1: 2.1, 5.2 AH2: 2.1, 5.1
9/18	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.	H: 4, 5 AH1: 2.1-2, 4.1, 4A-C AH2: 3.1, 5.1, 5.2, 5.3
9/25	Discussion and Review for the First Exam	Study Guide I
9/27	First Examination	Paper Topics
10/2	Exams returned and Reviewed
10/4	Why Govenments 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.	H: 4, 5 AH1: 2.1-2, 4.1, 4A-C AH2: 1.1, 3.1, 5.1, 5.2, 5.3
10/18	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.	H: 7 AH1: 3.1, 3.2, 4.2 AH2: 6.1, 6.2
11/1	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?	AH1: 6.1, 6.2, 6.3, 6C AH2: 2.1, 2.2, 2.3
11/6	Election Day--No Classes
11/8	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.)	H: 24 AH1: 9.1 AH2: 9.3
	REMINDER TO GET PAPERS UNDERWAY	Paper Topics
11/13	The Welfare State: Notes on Social Security and Medicare, OASDI, the lock box myth, true distribution of tax burden varies with supply and demand, politics of social security (and medicare) benefits--an aging median voter. Entitlement Growth and future taxes and/or deficits. Supplemental References and resources: Social Security Annual Report , (OASDI History, Medicare Reforms, Medicare Annual Trustiees Report CBO](Feldstein on reform), (notes on the Demand for Social Insurance):	H 20 , AH2: 8 AH1: 5.2 RJ Samuelson
11/15	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	AH2:4.3 H17 CBO Report 2014 CBO Report 2018
11/17-25	Fall Recess/Thanksgiving Break
11/27	Forest From Trees Lecture / Paper Workshop	H: 20, 22 / AH1: 5.1, 5B, 10.1, 10.B AH2: 8.1, 8.2, 8.3
11/29	Review for Second Exam	Study Guide II
12/4	Second Examination
12/6	Exams Returned / Overview of Class

12/12	Research Paper Due at Midnight

Public Economics
Econ 441
WVU, Fall 2018
Professor Roger D. Congleton

Class room and time: B&E 428 4:00-5:15 Tuesday -Thursday

Office:   405 B&E
Phone:   304.293.7866
E-Mail:   roger.congleton@mail.wvu.edu (the most reliable contact method)
Website: rdc1.net

Office Hours:
Wed.: 2:00-3:30,
Thursday: 2:00-3:30
and by appointment

Suggested Texts:

Syllabus

Holcombe, R. (2005) Public Sector Economics: The Role of Government in the American Economy. NY: Prentice Hall.
Hillman, A. L. (2009/3) Public Finance and Public Policy, Responsibilities and Limitations of Government. (second edition) Cambridge: Cambridge University Press. (Either the first [AH1] or second edition [AH2] is fine. AH1 below refers to chapters in the first edition, AH2 to chapters in the second edition.)

Class Notes, available via this website

Public Finance Links

Date

(Tentative) COURSE OUTLINE

Readings

8/12

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.

US Statistical Abstract

World Bank Statistics
H: 1, 2 / AH1: 1
AH2: 1.1 S1A, S1B
Deficits (Fred) Size AEI

8/21

Review of Economic Tools: The Net Benefit Maximizing Model of human choice, applied to demand and supply, consumer surplus and profit.

8/28

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)

H: 10, 11, 12, 13
AH1: 2E, 7.1 and 7.2
AH2: 4.1, 4.2, and 9.1
US Tax History / Wiki

9/11

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
AH1: 2.1, 5.2
AH2: 2.1, 5.1

9/18

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.

H: 4, 5

AH1: 2.1-2, 4.1, 4A-C
AH2: 3.1, 5.1, 5.2, 5.3

9/25

Discussion and Review for the First Exam

Study Guide I

9/27

First Examination

Paper Topics

10/2

Exams returned and Reviewed

10/4

Why Govenments 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.

H: 4, 5

AH1: 2.1-2, 4.1, 4A-C
AH2: 1.1, 3.1, 5.1, 5.2, 5.3

10/18

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.

H: 7

AH1: 3.1, 3.2, 4.2
AH2: 6.1, 6.2

11/1

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?

AH1: 6.1, 6.2, 6.3, 6C
AH2: 2.1, 2.2, 2.3

11/6

Election Day--No Classes

11/8

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.)

H: 24
AH1: 9.1
AH2: 9.3

REMINDER TO GET PAPERS UNDERWAY

Paper Topics

11/13

The Welfare State: Notes on Social Security and Medicare, OASDI, the lock box myth, true distribution of tax burden varies with supply and demand, politics of social security (and medicare) benefits--an aging median voter. Entitlement Growth and future taxes and/or deficits. Supplemental References and resources: Social Security Annual Report , (OASDI History, Medicare Reforms, Medicare Annual Trustiees Report CBO](Feldstein on reform), (notes on the Demand for Social Insurance):

H 20 , AH2: 8
AH1: 5.2
RJ Samuelson

11/15

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

AH2:4.3
H17
CBO Report 2014
CBO Report 2018

11/17-25

Fall Recess/Thanksgiving Break

11/27

Forest From Trees Lecture / Paper Workshop

H: 20, 22 / AH1: 5.1, 5B, 10.1, 10.B

AH2: 8.1, 8.2, 8.3

11/29

Review for Second Exam

Study Guide II

12/4

Second Examination

12/6

Exams Returned / Overview of Class

12/12

Research Paper Due at Midnight