20271 - PUBLIC ECONOMICS

Some knowledge of microeconomics and microeconometrics is recommended.

Government intervention in modern economies is ubiquitous and sizeable. As a crude measure, government revenues and expenditures in European countries account for 40% of GDP on average, and the COVID-19 crisis has enhanced government role in market economies. Government intervention reduces inequality and promotes social mobility, but it can also distort market incentives and generate inefficiency. How to address this potential trade-off is in the hands of national governments, which act in a globalised world, where labour and capital flows may limit governments’ room for manouevre. Understanding when the government should intervene, how it should do so and with what consequences is crucial to grasp how modern economies work. The aim of this course is to provide students with theoretical and empirical tools to analyse some areas of public intervention. During classes we will identify the institutional details which characterise a given policy; frame policy questions in theoretical terms; find the appropriate data to perform empirical analysis on the impact of a given public policy and familiarise with the empirical toolkit that is used in the literature to analyse the impact of policy interventions.

The course focuses on selected areas of public intervention, which are at the forefront of policy debate and academic research. We start from the observation that inequality is undermining economic stability and social cohesion, and study the different angles from which public policy can tackle it and tools that can be adopted to this end. These include:

• Education and skill formation
• Labour market participation
• Gender
• Family policy
• Social security and redistribution
• Tax systems and tax evasion

• Recognise the main trends in public intervention in the economy
• Identify the main justifications for government intervention
• Illustrate modes of intervention in different areas of public policy and their effects
• Describe what motivates tax evasion
• Distinguish various dimensions of inequality and discuss policy which can address them
• Select the appropriate empirical research methods to evaluate public policy
• Know how to conduct policy evaluation

Address policy relevant questions by:

• Identifying the institutional details which characterise a given policy
• Framing the policy question in theoretical terms
• Choosing the appropriate data to perform empirical analysis on the impact of the policy

Analyse and interpret the results of empirical analyses

Advocate for specific public policy interventions

• Face-to-face lectures
• Group assignments

Group assignments are of two types: 1) Group presentations; 2) A take-home assignment using Stata to replicate the analysis of scientific papers. For group presentations, each group must prepare a presentation on a given topic starting from the reading of academic papers. The topic can be chosen from a list provided by the professors during the course. Students must submit presentation slides, an abstract and the reading list on which the presentation is based.

Students who decide not to give group presentations in class can write an individual essay on a given topic, chosen from a list provided by the professors, and based on the reading of academic papers.

Two written partial exams or one written general exam, plus group assignments. Students must take the written exam (partial or general) and at least one between the take-home group assignment and the group presentation/individual essay.

The written exam aims at verifying that students are able to present theoretical models, to analyse and interpret the results of empirical analyses, and to discuss alternative policy reform proposals. The written exam is worth up to 25 points.

The take-home assignment is worth up to 3 points. It must be delivered by the end of the course.

Group presentations are worth up to 3 points.

Each group must prepare a presentation on a given topic starting from the reading of academic papers. The topic can be chosen from a list provided by the professors during the course. Students must submit presentation slides, an abstract and the reading list on which the presentation is based. (Some) presentations are delivered in class.

Students must form a group of 3/4 people by the end of the Midterm break. Group presentations are planned to take place during the last two-three classes of the course.

Students who decide not to give group presentations in class have the option to write an individual essay on a given topic, chosen from a list provided by the professors, and based on the reading of academic papers. The essay is worth up to 3 points. The essay must be delivered by the date of the exam.

Note that, according to University’s rules, you can enrol the second partial exam (PI) only ONCE in the January session.

Most of the course is based on articles from scientific journals, working papers, lecture slides and notes. The compulsory readings are provided in the detailed course schedule and are divided by topic. All the readings are available on Blackboard for download. Updates to the reading list are possible to adjust to the pace of the class and will be promptly communicated.