Public Finance

Catalog description

Government intervention is a pervasive feature of every modern economy. The goal of this course is to develop the economic tools for understanding and evaluating a wide range of government behaviors such as taxation and redistribution policy, the public provision of goods and services, and the regulation of private markets. ECON 342 begins by considering "market failures" that justify government intervention in a market economy. To respond to such failures, governments must raise revenues through taxation. Using the tools of microeconomic theory, we will develop a framework for thinking about the positive and normative effects of alternative forms of taxation. Particular attention will be paid to the individual income tax in the U.S., allowing students to understand the efficiency, distributional and behavioral implications of recent changes in the tax code. We will then turn to the expenditure side of the public sector. The economic principles used to evaluate public expenditures will be discussed and exemplified through the analysis of significant public programs. Of particular interest will be the effect of public programs on the incentives faced by workers and families. Prereq: ECON 102 .