EC950 Index: Graduate Public Finance

	Public Finance Econ 950 GMU, Spring 2010 Professor Roger D. Congleton
.	Syllabus
Suggested Texts:	Class Room: West Building 1004	Snow News Class Cancelled 2-2-10 Class Cancelled 2-9-10
	Hillman, A. L. (2009) Public Finance and Public Policy, Responsibilities and Limitations of Government. (SecondEdition) Cambridge: Cambridge University Press. (Ether the first [AH1] or second [AH2] edition is fine.) Tanzi, V. and L. Schuknecht (2000) Public Spending in the 20th Century: A Global Perspective. Cambridge: Cambridge University Press. Congleton, R. D. and B. Swedenborg (2006) Democratic Constitutional Design and Public Policy. Cambridge Mass: MIT Press.	Office Hours: Tuesday, 2:00-2:30, Thursday 2:00-3:30 and by appointment
	Class Notes, available via this website, (will be updated during semester)
	(The lectures and exams after the "snow week" have been postponed a week and reflect the Provost's guidelines.)
Date	TENTATIVE COURSE OUTLINE	Readings
1/19	Introduction: Overview of fical policy in the United States and OECD countries: growth of tax and expenditures, composition of, increasing centralization. Theories of governmental action, the link between "optimal" expenditures and taxation Welfare Economics: Positive and Normative Policy Analysis: Positive and nomative analysis: the Pareto principles, Utilitarianism, Contractarianism, Cost-Benefit Analysis Applications: property taxes, excise taxes, head taxes, and income taxes.	AH1: 1 T&S 2 AH2: 4.1, 4.2, 7.1 GAO overview of US gov finance (report) US Statistical Abstract World Bank Statistics Dow and GNP qtr changes
1/26	A Review of Elementary Public Fiance Tools (A Geometrical Review) Net-Benefit-maximzation as a model of rational choice, net benefits in the aggregate, efficiency of competitive markets, dead weight loss of excise taxes, impact of taxes on market prices and output in the short and long run.	AH1: 2E, 7.1 and 7.2 AH2: 4.1, 4.2
2/02 (Postponed to 2/16)	The Utilitarian Theory of Government: Public Goods and Externalities: Public and Private Goods, the free rider problem; Pareto optimal supply of public goods, Samuelsonian,and Lindalh Taxes; Externalities and Market Failures, Pigovian taxes. Applications: national defense, clean air and water, highways, welfare.	AH1: 2.1, 2.2, 4.1, 4A, 4C, 5.2 AH2: 3.1, 5.1, 5.2,9.1 T&S 3, 5
2/23	The Positive Theory of Government Services (and Taxes): The median voter model and the demand for public services. The median voter model, bureaucracy as an interest group, interest groups, rent-seeking, fiscal illusion, and the jury theorem. Interest Groups and Public Policy: Economic and Ideological Special Interests and Rent-Seeking Losses	AH1: 6.1, 6.2, 6.3, 6C AH2:2.1, 2.2, 6.1, 6.2
3/2	Normative Principles of Taxation: Utilitarian Theores of Taxation: deadweight loss as excess burden: advantages of neutral taxes: Ramsay and Henry Georgian taxation (minimizing dead weight loss), Progressive and regressive taxation, and proportional taxation, Contractarian theories of taxation (Buchanan and Rawls), Benefit Taxation (Lindalh), generality norms.	AH1: 2, 2E, 5, 7.1 and 7.2 AH2:9.1, 9.2 US Tax History Tax Data: Overviews
3/09	No Class / Spring Break	Paper Topics
3/16	Principles and Practice of Debt Finance Ricardian neutrality, limits to inter-generational shifting of taxes, political biases favoring debt over taxes, Keynesian macroeconomics, crowding out, balanced budget amendments, redistribution.	Data from the Statistical Abstract of the United States OECD data on Debt
3/23	Public Finance and Relationships Between Governments: Voting with Your Feet (the Tiebout Model), Decentralization, Intergovernmental Externalities and Economies of Scale (an optimal federal system). Applications: decentralization, fiscal federalism, capital flight.	AH1: 3.1, 3.2, 4.2 AH2: 9.3 C&S 8 Mueller on Fed Study Guide I
3/30	Institutions and the Effective Demand for Government Services Aggregating Preferences and Intra-Governmental Bargaining. The effects of electoral systems, bicameralism, presidential and prime ministerial institutions on government expenditures, taxation and debt.	C&S 1, 3,11 T&S 8 The Growth of Government Services
4/6	EXAMINATION (take home)
4/13	The Demand for Social Insurance: Is it all about security or transfers? Analysis of the political demand for economic, health, and longevity insurance. Has social insurance become the "main product" of Western democracy?	T&S 1 A Liberal Welfare State?
4/20	Application: Overview of Social Security (notes) Paygo, Digressive taxation, Myth of the "Lock Box," The Future of Social Security (History) , SS Fast Facts	AH1: 5.1, 5B, 10.1, 10.B Rise of the Welfare State WHO on Healthcare
4/27 (TBD)	Application: The Financial Crisis and Bailout of 2008-09 How broad is the safety net? Is macro economics a form of social insurance?
4/27 (TBD)	Applications to Contemporary Public Finance Issues: Overview of Taxation and Reform (notes), Decentralization, International Taxation and Growth, Future / Recent Tax Reforms (CBO analysis), Analsysis of Major Tax Reforms (US Treasury White Paper, 2002, O'Neill) History of Taxation in the US	AH1: 7A, 7B, 7C Pres Bush's Panel on Tax Reform OMB-2009 Budget Proposal
4/27 (TBD)	Applications to Contemporary Public Finance Issues: International Organizations as Public Goods Providing Clubs without Powers of Taxation	GEF Paper
5/1	(tentative) Paper Workshop (scheduled for Carow Hall 10:00 - 1:00)
5/4	An Overview of Public Finance

5/10** (revised)	14-20 Page research paper due midnight via e-mail on an applied public finance topic

	** Date may be changed.

Public Finance
Econ 950
GMU, Spring 2010

Professor Roger D. Congleton

Syllabus

Suggested Texts:

Class Room: West Building 1004

Snow News
Class Cancelled 2-2-10
Class Cancelled 2-9-10

Hillman, A. L. (2009) Public Finance and Public Policy, Responsibilities and Limitations of Government. (SecondEdition) Cambridge: Cambridge University Press. (Ether the first [AH1] or second [AH2] edition is fine.)

Tanzi, V. and L. Schuknecht (2000) Public Spending in the 20th Century: A Global Perspective. Cambridge: Cambridge University Press.

Congleton, R. D. and B. Swedenborg (2006) Democratic Constitutional Design and Public Policy. Cambridge Mass: MIT Press.

Office Hours:
Tuesday, 2:00-2:30,
Thursday 2:00-3:30
and by appointment

Class Notes, available via this website, (will be updated during semester)

(The lectures and exams after the "snow week" have been postponed a week and reflect the Provost's guidelines.)

Date

TENTATIVE COURSE OUTLINE

Readings

1/19

Introduction: Overview of fical policy in the United States and OECD countries: growth of tax and expenditures, composition of, increasing centralization. Theories of governmental action, the link between "optimal" expenditures and taxation

Welfare Economics: Positive and Normative Policy Analysis: Positive and nomative analysis: the Pareto principles, Utilitarianism, Contractarianism, Cost-Benefit Analysis Applications: property taxes, excise taxes, head taxes, and income taxes.

AH1: 1 T&S 2
AH2: 4.1, 4.2, 7.1
GAO overview of US gov finance (report)

US Statistical Abstract

World Bank Statistics

Dow and GNP qtr changes

1/26

A Review of Elementary Public Fiance Tools (A Geometrical Review)
Net-Benefit-maximzation as a model of rational choice, net benefits in the aggregate, efficiency of competitive markets, dead weight loss of excise taxes, impact of taxes on market prices and output in the short and long run.

AH1: 2E, 7.1 and 7.2
AH2: 4.1, 4.2

2/02 (Postponed to 2/16)

The Utilitarian Theory of Government: Public Goods and Externalities: Public and Private Goods, the free rider problem; Pareto optimal supply of public goods, Samuelsonian,and Lindalh Taxes; Externalities and Market Failures, Pigovian taxes. Applications: national defense, clean air and water, highways, welfare.

AH1: 2.1, 2.2, 4.1,
4A, 4C, 5.2
AH2: 3.1, 5.1, 5.2,9.1
T&S 3, 5

2/23

The Positive Theory of Government Services (and Taxes): The median voter model and the demand for public services. The median voter model, bureaucracy as an interest group, interest groups, rent-seeking, fiscal illusion, and the jury theorem. Interest Groups and Public Policy: Economic and Ideological Special Interests and Rent-Seeking Losses

AH1: 6.1, 6.2, 6.3, 6C

AH2:2.1, 2.2, 6.1, 6.2

3/2

Normative Principles of Taxation: Utilitarian Theores of Taxation: deadweight loss as excess burden: advantages of neutral taxes: Ramsay and Henry Georgian taxation (minimizing dead weight loss), Progressive and regressive taxation, and proportional taxation, Contractarian theories of taxation (Buchanan and Rawls), Benefit Taxation (Lindalh), generality norms.

AH1: 2, 2E, 5, 7.1 and 7.2
AH2:9.1, 9.2
US Tax History
Tax Data: Overviews

3/09

No Class / Spring Break

Paper Topics

3/16

Principles and Practice of Debt Finance Ricardian neutrality, limits to inter-generational shifting of taxes, political biases favoring debt over taxes, Keynesian macroeconomics, crowding out, balanced budget amendments, redistribution.

Data from the Statistical Abstract of the United States

OECD data on Debt

3/23

Public Finance and Relationships Between Governments: Voting with Your Feet (the Tiebout Model), Decentralization, Intergovernmental Externalities and Economies of Scale (an optimal federal system). Applications: decentralization, fiscal federalism, capital flight.

AH1: 3.1, 3.2, 4.2
AH2: 9.3
C&S 8 Mueller on Fed
Study Guide I

3/30

Institutions and the Effective Demand for Government Services Aggregating Preferences and Intra-Governmental Bargaining. The effects of electoral systems, bicameralism, presidential and prime ministerial institutions on government expenditures, taxation and debt.

C&S 1, 3,11 T&S 8
The Growth of Government Services

4/6

EXAMINATION (take home)

4/13

The Demand for Social Insurance: Is it all about security or transfers? Analysis of the political demand for economic, health, and longevity insurance. Has social insurance become the "main product" of Western democracy?

T&S 1
A Liberal Welfare State?

4/20

Application: Overview of Social Security (notes) Paygo, Digressive taxation, Myth of the "Lock Box," The Future of Social Security (History) , SS Fast Facts

AH1: 5.1, 5B, 10.1, 10.B

Rise of the Welfare State

WHO on Healthcare

4/27 (TBD)

Application: The Financial Crisis and Bailout of 2008-09 How broad is the safety net? Is macro economics a form of social insurance?

4/27 (TBD)

Applications to Contemporary Public Finance Issues: Overview of Taxation and Reform (notes), Decentralization, International Taxation and Growth, Future / Recent Tax Reforms (CBO analysis), Analsysis of Major Tax Reforms (US Treasury White Paper, 2002, O'Neill) History of Taxation in the US

AH1: 7A, 7B, 7C
Pres Bush's Panel on Tax Reform
OMB-2009 Budget Proposal

4/27 (TBD)

Applications to Contemporary Public Finance Issues: International Organizations as Public Goods Providing Clubs without Powers of Taxation

GEF Paper

5/1

(tentative) Paper Workshop (scheduled for Carow Hall 10:00 - 1:00)

5/4

An Overview of Public Finance

5/10** (revised)

14-20 Page research paper due midnight via e-mail on an applied public finance topic

** Date may be changed.