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Course 2021-2022 a.y.

30264 - SCIENZA DELLE FINANZE / PUBLIC FINANCE

Department of Social and Political Sciences

For the instruction language of the course see class group/s below

Go to class group/s: 31

BEMACS (6 credits - I sem. - OP  |  SECS-P/03)
Course Director:
MASSIMO ANELLI

Classes: 31 (I sem.)
Instructors:
Class 31: MASSIMO ANELLI

Class group/s taught in English

Suggested background knowledge

A good knowledge of basic microeconomic theory (e.g. utility maximization, marginal rate of substitution, elasticity, mathematical derivatives) is strongly suggested. If you are not familiar with these concepts, the textbook provides a review chapter that you are required to prepare on your own. I also provide slides for your own review.


Mission & Content Summary
MISSION

The goal of this course is to discuss current topics in Public Finance and to study government intervention in the economy from a normative perspective. The course addresses the fundamental questions of public finance: - When should the government intervene in the economy? - How might the government intervene? - What is the effect of those interventions on economic outcomes? - Why do governments choose to intervene in the way that they do? - What drives the design of social insurance schemes, of the welfare state, and of the tax system? The course trains students to understand the need for and the limitations of the public sector, as well as how State intervention in the economy can be improved. This proves helpful in the analysis and forecast of policy decisions, by market analysts or by professionals working in government or international organizations.

CONTENT SUMMARY
  1. In the first part of the course, we cover the main motivations for government intervention in the economy:
    • We discuss equity and efficiency rationales.
    • We analyze the different types of market failures, such as externalities and underprovision of public goods.
    • We discuss how to measures the benefits and the costs of government interventions (cost-benefit analysis).
    • Which is the optimal government level for intervention (fiscal federalism).
    • Why governments intervene in the way they do (political economy).
    • We conclude the first part by analyzing an impure type of public good that is provided by governments of all developed economies: education.
  2. In the second part of the course, we discuss the social insurance framework and focus on the main welfare state programs:
    • Pensions.
    • Healthcare.
    • Unemployment benefits.
    • Anti-poverty programs.
  3. Finally, we discuss how governments raise the resources needed for intervention, by analyzing taxation issues:
    • Tax incidence.
    • Tax efficiency.
    • Distortionary effects of taxation.

Intended Learning Outcomes (ILO)
KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
  • Illustrate the economic rationales of government intervention in market economies.
  • Define Public Goods.
  • Identify in which instances government intervention is needed to correct market failures.
  • Explain how social insurance programs are designed.
  • Estimate economic costs and benefits of government intervention.
APPLYING KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
  • Discuss the role and extent of government intervention in market economies based on normative theory and empirical evidence.
  • Analyze empirical evidence of academic research that evaluates the effects of government intervention.
  • Evaluate effectiveness of public policies.
  • Compare different policy/reform proposals for both public expenditure and taxation.
  • Evaluate why governments intervene in the way they do.

Teaching methods
  • Face-to-face lectures
  • Exercises (exercises, database, software etc.)
  • Group assignments
  • Interactive class activities (role playing, business game, simulation, online forum, instant polls)
DETAILS

We solve and discuss numerical exercises and theoretical questions in class through the course. The goal is to put the concepts and theory of public finance "at work". We use theoretical and empirical tools learned during the course for in-class debates prepared in teams on recent public policy discussions.


Assessment methods
  Continuous assessment Partial exams General exam
  • Written individual exam (traditional/online)
  •   x x
  • Group assignment (report, exercise, presentation, project work etc.)
  •   x x
    ATTENDING AND NOT ATTENDING STUDENTS

    For both attending and not-attending students, written individual exams are a mix of open ended essays, numerical or graphical excercises, and "True" or "False" questions aimed at assessing students' ability to illustrate the economic rationales of government intervention in market economies, identify market failures and propose viable correcting public policies, estimate economic costs and benefits of the proposed policies and explain how social insurance programs are designed. The assessment will also be aimed at testing students' developed ability to analyze empirical evidence of academic research that evaluates the effects of government intervention, compare different policy/reform proposals for both public expenditure and taxation and evaluate why governments intervene in the way they do.

     

    The optional in-class debate is  aimed at assessing whether students develop adequate skills to read, analyze and discuss technical reports and academic research papers on several public policy current issues. The debate will also strenghten team work, critical thinking and presentation skills.

     

    Four options available for the assessment, based on student’s preference:

     

    Option A: partial exam (50%) on the first half of the course + partial exam (50%) on the second half of the course. The final grade is the average of the two grades if and only if they are both above 18

     

    Option B: general exam (100%) on all the topics

     

    Option C:  partial exam (40%) on the first half of the course + final (40%) on the second half of the course + in-class debate (20%). The final grade is the weighted average of the exam and debate grades. The debate grade can only improve the grades obtained in the exams. If debate grade is lower than the average grade in the exams, the debate grade will not be considered. In any case the student is required to pass both partial exam (i.e. if and only if both partial exams are above 18)

     

    Option D: general exam (80%) on all the topics  + in-class debate (20%). The final grade is the weighted average of the exam and debate grades. The debate grade can only improve the grades obtained in the exams. If debate grade is lower than the average grade in the exams, the debate grade will not be considered. In any case the student is required to pass the general exam (i.e. if and only if the general exam is above 18)


    Teaching materials
    ATTENDING AND NOT ATTENDING STUDENTS
    • J. GRUBER, Public Finance and Public Policy, Palgrave Macmillan, 6th edition.
    •  
    • I upload the slides used for lectures on Bboard. Online teaching materials are compulsory for the course. Optional textboook excercises and solutions are posted on Bboard.
    Last change 04/01/2022 16:04