ECONOMICS 432G: PUBLIC FINANCE
10:30am-11:45am MTWTh
Summer 2010
Department of Economics, College of Business and Technology
Accredited by AACSB International--TheAssociation to Advance Collegiate Schools of Business
CONTACT INFORMATION:
Professor: Dr. Tara Westerhold
Office Location:Stipes Hall 442 I (inside the Economics Department)
Phone: 298-1313 (direct line with voicemail)
E-mail:
Office Hours: MTW 1.00pm-2.00pmand by appointment
Website:
COURSE DESCRIPTION:In many cases private markets allocate goods and services among individuals efficiently assuring that the proper quantity of goods and services are supplied given consumers’ tastes and preferences in line with the economy's productive abilities. If markets were always efficient and the distribution of income was socially acceptable, then there would be little or no role for government. However, in many casesconditions for private market efficiency are violated necessitatinggovernment intervention in markets and/or government provision of goods and services. The field of public finance examines the government’s generation of revenue (via taxation policies) and the redistribution of these revenues through various government expenditure programs (health care, education, social security, etc) in order to increase efficiency and/or achieve some income redistribution objective.This course will examine both the design of public sector programs assuming the goal of such programs is to maximize the social net benefits (using cost benefit analysis) and various taxation options that could be used to pay for those expenditures (minimizing efficiency losses and distortion of economic activity).
COURSE OBJECTIVES: Upon completion of this course students will understand
the economic rationale for government programs in light of private market failures (public goods and externalities);
the basic framework for tax analysis including the relationship between taxation and income distribution, and efficient and equitable taxation;
the principles of cost-benefit analysis and how they are used in public expenditure programs.
PREREQUISITE: Economics 232-- Principles of Microeconomics.
COURSE MATERIALS:
Public Finance by Harvey S. Rosen and Ted Gayer (9th edition ISBN: 978-0-07-351135-1).
Calculator—you may not use your PDA or cell phone as a calculator for exams
Access to class website:
DETERMINING YOUR COURSE GRADE (Undergraduate Credit):Your course grade is determined by your performance across four categories: Exam I, Exam II, and Exam III (the final exam),and your Homework Average (all HW scores combined and averaged). Each exam is weighted 28% of your overall course grade with the homework average weighted 16% of your overall grade.
DETERMINING YOUR COURSE GRADE (Graduate Credit):Your course grade is determined by your performance across five categories: Exam I, Exam II, Exam III (the final exam), your Homework Average (all HW scores combined and averaged) and journal article summaries assigned throughout the course. Each exam is weighted 25% of your overall course grade, your homework averaged is weighted 15% of your grade, and article summaries (average) are weighted the remaining 10% of your grade. Exams and homework assignments for graduate students will contain additional problems not expected of undergraduate students.
Exams I, II,and III. There will be three exams in this course, the last of which will be administered on the day scheduled for the final exam. The final exam is not comprehensive in the sense that you will be tested on the entire course; however, the course material covered in the beginning is integral in understanding future topics. Each exam will be comprised of several parts most of which comes in the form of mathematical problem solving, graphical analysis, short answers, and a few multiple choice questions. Exams for undergraduate students and graduate students will contain some common content; however, graduate students will have additional questions from readings and/or supplemental material provided by the instructor.Exam dates and format will be announced in class and published on the class website.
Homework Assignments:Periodic homeworkassignmentswill be given throughout the semester. Homework assignments and due dates will be announced in class and posted on my website. Assignments are graded on accuracy and completeness. You may work together on assignments; however, your work should not be a carbon copy of someone else’s assignment. Please make sure you are writing up your own answers and explaining your solutions in your own words.Homework assignments for undergraduate students and graduate students will contain some common content; however, graduate students will have additional questions from readings and/or supplemental material provided by the instructor.
Assignments not turned it to me at the beginning of class when assignments are collected are considered late. Late assignments will receive a penalty of 15% per week day. Hence, if an assignment is due on Wednesday and you turn it in on Thursday then it is assessed a 15% penalty. If you wait until Friday it receives a 30% penalty. You may turn in late homework to my box in the Economics Department (ST442) any week day until assignments are returned to the class.
Assignments that are not stapled will receive a penalty of 15%.
For graduate students only: Periodic journal articles will be assigned for your review. An article summary will be required for each article assigned. The article summary must be 3-5 pages in length and typed. The summary should provide an overview of the paper topic, the research methodology undertaken by the author(s), and a discussion of results. Where appropriate you may be asked to comment on the perceived strengths and weaknesses of the work.
GRADING SYSTEM: Every assignment, exam, and article summary (for graduate students) will be graded on the following grading scale with 100 points being the maximum points possible (unless bonus points are available)
A 90-100+
B 80-89
C 70-79
D60-69
F59 below
STUDENT RESPONSIBILITIES:
The rights and responsibilities of each student as set forth by the administration of Western Illinois University with regard to academic dishonesty, grade appeals, etc. can be found by visiting the following webpage .
Regular Attendance-- Students are expected to attend class regularly. If you miss a class you should check the website for class information. I will not provide notes for any student missing class for any reason.Check the class website each day to see what you missed.Make up quizzes and/or exams will be given at my discretion for documented, excused absences only. Whenever possible you should make such arrangements with me prior to the exam date.
Academic Responsibility and Academic Integrity:Academic dishonesty of any kind (including but not limited to plagiarism, fabrication, falsification of documents, cheating, or complicity in academic dishonesty) will result in an automatic F for the courseand referral to Student Judicial.
ADA Compliance: In accordance with University policy and the Americans with Disabilities Act (ADA), academic accommodations may be made for any student who notifies the instructor of the need for an accommodation. For the instructor to provide the proper accommodation(s) you must obtain documentation of the need for an accommodation through Disability Support Services and provide it to the instructor. It is imperative that you take the initiative to bring such needs to the instructor’s attention, as he/she is not legally permitted to inquire about such particular needs of students. Students who may require special assistance in emergency evacuations (i.e. fire, tornado, etc.) should contact the instructor as to the most appropriate procedures to follow in such an emergency. Contact Disability Support Services at 298-2512 for additional services.
Tentative Course Outline
This outline is subject to change. If we do not have time to complete the entire course outline, adjustments may be made throughout the semester in terms of topic coverage and testing.
Material for Test I (approximately 2.5 weeks)
IntroductionChapter 1
Tools of Positive AnalysisChapter 2
Tools of Normative Analysis Chapter 3
Public GoodsChapter 4
ExternalitiesChapter 5
Material for Test II (approximately 2.5 weeks)
EducationChapter 7
Cost-Benefit AnalysisChapter 8
Health Care MarketChapter 9
Government and Health CareChapter 10
Material for Test III (approximately 2.5 weeks)
Taxation and Income DistributionChapter 14
Taxation and Efficiency Chapter 15
Efficient and Equitable TaxationChapter 16
Personal Taxation and BehaviorChapter 18