Mr. Mutti Ecn 250
Carnegie 204 Fall 1998
Office Hours: 2:30-4:00 T, TH or by appointment

 Public Finance

Objectives and Scope

This course is divided into four blocs:

  1. We begin with an overview of various reasons for government intervention in the economy and with an assessment of how decisions are made by democratic governments.
  2. We evaluate government expenditure programs (provision of goods and services and transfers) in terms of their effects on total output (benefit-cost analysis) and the distribution of income.
  3. We evaluate various tax policies with respect to their efficiency and equity effects and consider some proposed reforms of the federal income tax system.
  4. We consider how public services and taxes are provided in a system that includes federal, state and local governments.

Textbook

Neil Bruce, Public Finance and the American Economy, Addison Wesley, 1998.

Course Requirements

You will take three hour exams and a cumulative final. Also you will write 2 short papers (6-8 pages), one assessing a benefit-cost study by the Army Corps of Engineers and another analyzing fiscal developments in a state within the United States. Each exam and each paper count 15 percent of your grade, and homework/class participation counts 10 percent.

COURSE OUTLINE

I. Introductory Overview

A. Economic Efficiency and Competitive Markets

B. Market Failures and the Case for Government Intervention

C. Public Decision Making and Administration

Bruce: Ch. 2, 3, 4,

Exam #1 -- approximately September 18th

II. Analysis of Expenditure Policies

A. Benefit-Cost Analysis - the Avenue of the Saints; the Sardar Sarovar Dam

B. Welfare Programs and the Alleviation of Poverty

C. Social Security, the largest federal program

D. Education, the largest state-local program

Bruce: 7, 8, 9, 10

Exam #2 -- approximately October 14th

Term Paper on Benefit-Cost Analysis due October 30th

III. Analysis of Tax Policies

A. General Principles of Tax Incidence and Efficiency Effects

B. Proposals to Reform the Income Tax System

Bruce: 11, 12, 13, 14, 17

Exam #3 -- approximately November 23rd

IV. Fiscal Interaction Among Different Levels of Government and State Development Strategies

Bruce: 5, 18

Term Paper on State Fiscal Development due December 7th

Final Exam - December 15th, 9:00 am



 
Grinnell College

 
Professor Mutti

Last updated November 6, 2001