Course Meeting Times
Lectures: 2 sessions / week, 1.5 hours / session
Recitations: 1 session / week, 1 hour / session
Course Description
Explores the role of government in the economy, applying tools of basic microeconomics to answer important policy questions such as government response to global warming, school choice by K-12 students, Social Security versus private retirement savings accounts, government versus private health insurance, setting income tax rates for individuals and corporations.
Prerequisites
14.01 Principles of Microeconomics
Requirements and Grading
There are three sets of requirements for this course:
| ACTIVITIES | PERCENTAGES |
|---|---|
| Midterm exam | 25% |
| Final exam | 50% |
| Problem sets | 25% |
Readings
The only required reading is my textbook:
Gruber, Jonathan. Public Finance and Public Policy. 3rd ed. Worth Publishers, 2009. ISBN: 9781429219495.
Exams
There will be a midterm exam worth 25% of the grade, and a final worth 50%. The midterm will be in class, 85 minutes, and closed book/closed notes.
Problem Sets
There will be 5 problem sets throughout the semester, each of which will consist of both mathematical exercises and essay questions. This requirement will be worth the remaining 25% of the grade. No late problem sets will be accepted for any reason. Grading will be based on the top 4/5 grades (your lowest homework grade will be dropped).
Calendar
| LEC # | TOPICS | KEY DATES |
|---|---|---|
| 1 | Why study public finance? | |
| 2 | Externalities in theory and practice | |
| Public goods in theory and practice | ||
| 3 | Basic theory, optimality and pricing | Homework 1 due |
| 4 | Cost/benefit analysis | |
| 5 | Political economy | |
| 6 | Local public goods and fiscal federalism | Homework 2 due |
| 7 | Public provision of private goods: education | |
| Midterm exam | ||
| Social insurance and redistribution | ||
| 8 | Overview | |
| 9 | Social security | |
| 10 | Unemployment insurance, disability insurance and workers’ compensation | |
| 11 | Health insurance | Homework 3 due |
| 12 | Redistribution and welfare policy | |
| 13 | The institutions and theory of taxation | |
| Taxation and individual behavior | ||
| 14 | Taxation and labor supply | Homework 4 due |
| 15 | Taxation and savings | |
| 16 | Taxation, risk taking and wealth | |
| 17 | Corporate taxation | Homework 5 due |
| 18 | Tax reform | |
| Final exam | ||
