ECO 354: Public Economics
(Tentative)
E-mail: Kriti.manocha@snu.edu.in
Office Hours: By appointment, Monday (4 pm to 6pm)
This is an introductory public economics course that focuses on the role of
government in the economy. It is designed to provide a basic understanding
of
reasons for government intervention,
the benefits of such policies, and
the consequent response of the economic agents.
The course begins with the scope of government intervention in case of
market failure, and then covers various forms of intervention from taxation,
redistribution to provision of public goods.
Expected learning outcomes:
Provide students with a theoretical understanding of important issues
in Public Sector Economics.
Develop an understanding of the link between theory and policy.
Develop an understanding of the methods of analysis used to evaluate
economic issues pertaining to the public sector.
Pre-requisites for this course: ECO 301
Assessment: Midterm (30%), 3 Problem sets (30%), Final Exam (40%)
Readings: The lectures loosely follow
Economics of the Public Sector [4th edition] by J E Stiglitz and J K
Rosengard, published by WW Norton & Co, 2015.
Public Finance and Public Policy [6th edition] by Jonathan Gruber,
Macmillan, 2019.
Topics:
1. Introduction: Introduction to public economics and review of
theoretical tools.
2. Public Goods: Characteristics of public goods; free rider problem;
optimal provision of public goods; non-excludability and preference
revelation; public provision of private goods.
3. Externalities: Role of the government; private solutions to
externalities.
4. Political Economy: Majority voting; median voter models; Arrow’s
impossibility theorem; oversupply of public goods; paradox of voting;
multi-dimensional issues; majority voting and costs.
5. Public Choice: Tiebout equilibrium.
6. Public Provision of Private Goods- Healthcare: Efficiency and
equity arguments for government intervention; information problems;
defining equity; compatibility of equity definitions.
7. Public Provision of Private Goods- Education: Efficiency and
equity arguments for government intervention; information problems;
measuring costs and benefits.
8. Tax Incidence: Introduction to the tax system, analysis of the tax
incidence in competitive and noncompetitive market structures.
9. Taxes and Economic Efficiency- Consumption: Analysis of the
effect of taxes on economic behaviour and welfare of consumers and
producers.
10. Taxes and Economic Efficiency- Labour Supply: Analysis of
the responses of labour supply to taxation.
