...

ECON 8211-001 Public Economics

by user

on
Category: Documents
3

views

Report

Comments

Transcript

ECON 8211-001 Public Economics
PUBLIC ECONOMICS: FUNDAMENTAL PRINCIPLES (ECON 8211-001)
Department of Economics, University of Colorado
Fall, 2004
Charles de Bartolome
Time: M, W: noon - 1:15 pm
Room: Econ 5
Office Hours: M 4-4:45 pm, Tu 10-11am,
Thurs 1:30-2:30 pm.
Office: Econ 203
e-mail: [email protected]
Textbooks:
Salanie, B., (2000), Microeconomics of Market Failures. Cambridge, MA: MIT Press (M of MF)
Salanie, B., (2003), The economics of taxation.. Cambridge, MA: MIT Press (E of T)
Course description: This course is the first course in a two-course sequence. This course
describes the key ideas in Public Expenditure and Taxation: public goods, externalities, public
choice, excess burden, optimal taxation and tax incidence. At the end of this course, you will
familiar with all the conceptual issues which must be addressed in a project in public economics.
The second course is a topics course which focuses on papers closer to the “frontier of
knowledge”.
Pre-requisites: Microeconomic Theory 1 ECON 7010. Microeconomic Theory 2, ECON 7030.
Problem Sets: The problem sets are an integral part of the course. They are designed to help you
use the material and a significant part of the exams will closely follow their format.
WebCT: Problem sets with answers are posted on the WebCT page located at: http://webct.colorado.edu
.
In the past, some students have had difficulty in downloading some of the pdf files posted on
WebCT . ITS advises that this is due to the large file sizes. ITS recommends that you open the
Adobe Acrobat Reader. Then click as: Edit > Preferences> General > Options and uncheck
“Allow Fast Web View”.
Grading: The student’s grade will be determined as: 50% Midterm, 50% Final.
Exams: The midterm will be held on Tuesday 12 October 7:00 - 9:00 pm.
The final will be held on Tuesday 14 December 10:30 am - 12:30 pm
Please let me know if one of these dates falls on a religious holiday you intend to observe and I
will arrange for you to take a make-up.
You should bring a blue-book to the exams.
Students with special needs: If you qualify for accommodations because of a disability, please
submit to me a letter from Disability Services (DS) in a timely manner so that your needs may be
addressed. DS determines accommodations based on documented disabilities (303-492-8671,
Willard 322, www.colorado.edu/sacs/disabilityservices).
Course outline: Shown below is a list of topics to be covered and likely dates.
PART 1: EXPENDITURE
23 Aug:
INTRODUCTION
25, 30 Aug,
FUNDAMENTAL WELFARE THEOREMS
M of MF, Chapter 1
Handout
Problem Set: Fundamental Welfare Theorems
1, 8, 13,
15 Sept
PUBLIC GOODS
Normative prescription:
M of MF, Chapter 5
Samuelson, P.A., (1954), "The pure theory of public expenditure," Review of
Economics and Statistics 36, 387-389.
Samuelson, P.A., (1955), "The diagramatic exposition of the theory of public
expenditure," Review of Economics and Statistics 37, 350-356.
Positive: non-rival and non-excludable:
Bergstrom, T., L. Blume and H. Varian, (1986), "On the private provision of
public goods," Journal of Public Economics 29, 25-49.
Andreoni, J., (1988), "Privately provided public goods in a large economy: the
limits to altruism," Journal of Public Economics 35, 57-73.
Isaac, R.M., and J.M. Walker, (1988), "Group size effects in public goods
provision: the voluntary contributions mechanism," Quarterly Journal of
Economics 103, 179-199.
Positive: non-rival and excludable:
Demsetz, H., (1970), "The private production of a public good," Journal of Law
and Economics 13, 293-306.
Oakland, W., (1974), "Public goods, perfect competition and underproduction,"
Journal of Political Economy 82, 927-939.
Problem set:
Problem set:
Problem set:
Problem set:
Efficient (First-Best) public good level.
Voluntary contributions mechanism.
Public goods paradox
"Market" provision of non-rival excludable good.
20,22,27,29
Sept
EXTERNALITIES
Normative Prescription:
M of MF, Chapter 6
Baumol, W.J., and W.E. Oates, (1988), The Theory of Environmental Policy, 2nd
Edition, Chap. 4 ("Externalities: formal analysis"), pages 36-56.
Englewood Cliffs, NJ:Prentice Hall.
Spulber, D.F., (1985), "Effluent regulation and long-run optimality," Journal of
Environmental Economics and Management 12, 103-116.
Ayres, I. and S. D. Levitt, (1998), “Measuring positive externalities from positive
victim precaution: an empirical analysis of Lojack,” Quarterly Journal of
Economics 13, 43-78.
Weitzman, M., (1974), “Prices vs. Quantities”, Review of Economic
Studies 41, 477-91
Problem set:
Problem set:
Problem set:
Problem set:
4, 6, 11 Oct
Consumption externality.
Production externality.
Externality - firm number.
Positive externality.
PUBLIC CHOICE
M of MF, Chapters 2, 3, 4.
Full information:
Mueller, D.C., (1989), Public Choice 2. Chaps. 4, 5, 7, 10, 11 and 20. Cambridge:
Cambridge University.
Pommerehne, W.W., (1978), Institutional approaches to public expenditure,
Journal of Public Economics 9, 255-280
Meltzer, A.H., and S.F. Richard, (1981), "A rational theme of the size of
government," Journal of Political Economy 89, 914-927.
Husted, T.A., and L.W. Kenny, (1997), “The effect of the expansion of the voting
franchise on the size of government,” Journal of Political Economy
105, 54-82.
Bowen, H.R., (1943), "The interpretation of voting in the allocation of economic
resources," Quarterly Journal of Economics 58, 27-48.
Osborne, M. J., and A. Slivinski, (1996), “A model of political competition with
Citizen-Candidates,” Quarterly Journal of Economics 111, 65-96.
Incomplete information:
Mueller, D.C., (1989), Public Choice 2. Chaps. 18. Cambridge: Cambridge
University.
Problem set:
Problem set:
Problem set:
Problem set:
Voted public goods level.
Voting the redistribution level
Voting cycles
Citizen-candidate model.
12 Oct
MIDTERM (7:00 - 9:00 pm in
)
PART 2: TAXATION
13,18,20,25
Oct
POSITIVE: TAX INCIDENCE
E ot T, Chapter 2.
Property tax capitalization:
de Bartolome, C.A.M., and S.S. Rosenthal, (1999), “Property tax capitalization in
a model with tax-deferred assets, standard deductions, and the taxation of
nominal interest,” Review of Economics and Statistics 81, 85-95.
27 Oct
1, 3 Nov
NORMATIVE: EXCESS BURDEN AND MARGINAL COST OF FUNDS
E of T, Chapter 3
de Bartolome, C.A.M., (1999), “Integrating tax distortions and externality
theory,” Journal of Public Economic Theory 1, 330-358.
Ballard, Charles L., and D. Fullerton, (1992), “Distortionary taxes and the
Provision of Public Goods”, Journal of Economic Perspectives 6, 117131.
Hausman, J., (1981), “Exact consumer’s surplus and deadweight loss”, American
Economic Review 71, 662-676.
Problem set:
Problem set:
Problem set:
Problem set:
8, 10, 15, 17
Nov
Excess burden with Cobb-Douglas utility
Excess burden with constant elasticity Hicksian Demand
Excess burden with linear Marshallian demand.
Marginal Cost of Funds.
NORMATIVE: OPTIMAL TAXATION
Indirect Taxation:
E ot T, Chapter 3
Atkinson, A.B., and J.E. Stiglitz, (1980), Lectures in Public Economics, Lecture
12. McGraw Hill, New York..
Corlett, W.J. and D.C. Hague, (1953), “Complementarity and the excess burden
of taxation,” Review of Economic Studies 21, 21-30.
Direct Taxation:
E ot T, Chapter 4.
Atkinson, A.B., and J.E. Stiglitz, (1980), Lectures in Public Economics, Lecture
13. McGraw Hill, New York..
Stiglitz, J.E., (1982), “Self-selection and Pareto-efficient taxation”, Journal of
Public Economics 17 , 213-240.
Also: E ot T, Chapter 7
Problem set: Efficient product tax structure: Cobb-Douglas utilities.
Problem set: Optimal tax: Goods complementary with leisure.
Problem set: Efficient Income Tax
22, 24 Nov
No class
PART 3: PULLING EXPENDITURE AND TAXATION TOGETHER
29 Nov
Second-best public goods level
Atkinson, A.B., and N.H. Stern, (1974), “Pigou, taxation and public goods,”
Review of Economic Studies 41, 119-128 .
de Bartolome, C.A.M, (2001), "Is Pigou Wrong? Can distortionary taxation cause
public spending to exceed the efficient level?" Working Paper of the
University of Colorado.
Problem set: Second-best level of the public good.
PART 4 : CLUBS AND LOCAL GOVERNMENT
1,6 Dec
CLUBS AND TIEBOUT MODEL
Berglas, E., (1976), On the theory of clubs,” Papers and Proceedings of the
American Economic Association 66 , 116-121.
Tiebout, C.M., (1956), “A pure theory of local expenditures,” Journal of Political
Economiy 94, 416-424.
Berglas, E., and D. Pines, (1981), “Clubs, local public goods and transportation
models,” Journal of Public Economics 15, 141-162.
Edel, M., and E. Sclar, (1974), “Taxes, spending, and property values:
supply adjustment in a Tiebout-Oates model,” Journal of Political
Economy 82, 941-954.
Eberts, R.W., and T.J. Gronberg, (1981), “Jurisdictional homogeneity and the
Tiebout hypothesis,” Journal of Urban Economics 10, 227-239.
Problem set: Clubs
Problem set: Club theory - visits
Problem set: Tiebout model of local government
8 Dec
THE MONOCENTRIC CITY
Mills, E.S., (1967), “An aggregative model of resource allocation in a
metropolitan area,” Papers and Proceedings of the American Economic
Association 57, 197-210.
Wheaton, W.C., (1977), “Income and urban residence: an analysis of consumer
demand for location,” American Economic Review 67, 620-631.
de Bartolome, C.A.M., and S.L. Ross, (2004), “Who’s in charge of the central
city? The conflict between efficiency and equity in the design of a
metropolitan area,” Journal of Urban Economics, forthcoming.
Problem set: Monocentric city
Fly UP