ECON W4465: Public Economics (Fall 2024)
Objective. The objective of the course is to understand the role that governments play in market economies. We will be interested in addressing questions of why, how and when governments do (and/or should) intervene and in the consequences of government policies. We will start by introducing empiri- cal and theoretical tools and concepts, and then follow up with analysis of externalities, social insurance programs and tax policy.
The class builds on microeconomic foundations, but it will be strongly motivated by actual policies. Sig- nificant attention will be devoted to empirical applications. On the theoretical side, we will be interested in both normative questions (what governments should do) and positive ones (what are the implications of what governments actually do).
Prerequisites: the course assumes background in intermediate microeconomics.
Textbook: There is no required textbook for this course. There is a recommended book that may be used as a reference for most topics: “Public Finance and Public Policy” by Jonathan Gruber (Worth Publishers, 7th edition, 2022, but prior editions are fine too). The book is excellent in providing policy context and intuition, so that reading the corresponding chapters in it is likely to be very helpful. However, the class does not directly follow its structure and many topics will be covered in more depth than the book does. Taxing Ourselves by Joel Slemrod and Jon Bakija (MIT Press, 2017) is a very accessible background reading for the second part of the course (not required).
Contact information: the recommended way of contacting the instructor is via e-mail (wk2110@columbia. edu). The class web page (available through the CourseWorks) will contain all materials related to the course (assignments, slides, extra readings, recordings, etc.). Instructor’s office hours will be held on Wednesdays, 10:30am-11:30am in 1118 IAB.
Teaching assistant: Jared Grogan ([email protected]). Jared will hold office hours on Tuesdays 5-6pm at IAB 1006A.
There will be review sessions that will take place before problem sets, the midterm and the final. Time and location TBC, but most likely at the same time as office hours at the Lehman Library 212 (Group Study Room).
Grading: midterm (40%), final (40%), four written problem sets (20%). No make up exams. In rare and unusual cases when absence can be formally excused, the midterm or final will account for 80%. Grading on the curve (approximately), using standard distribution of grades in the economics department.
All problem sets will be distributed in class, posted on the courseworks and will be due in exactly one week. No late submissions. Problem sets should be submitted online.
Working in groups on problem sets is not forbidden, but every student has to submit individual solutions in his/her own words.
Outline
Chapter numbers are from Gruber’s book
1. (Wed 9/4) Introduction (Chapters 1 and 4)
2. (Mon 9/9) Empirical tools (Chapter 3)
3. (Wed 9/11) Incidence and efficiency cost of government policies (Chapters 19 and 20)
4. (Mon 9/16) continued
5. (Wed 9/18) Externalities (Chapters 5 and 6)
Problem set #1 distributed, due in one week
6. (Mon 9/23) continued
7. (Wed 9/25) Social Insurance (Chapter 12)
Problem set #1 due
8. (Mon 9/30) continued
9. (Wed 10/2) continued
Problem set #2 distributed, due in one week
10. (Mon 10/7) Major social insurance programs: unemployment, disability, Social Security (Chapters 13 and 14)
11. (Wed 10/9) Health Insurance (Chapters 15 and 16)
Problem set #2 due
12. (Mon 10/14) continued
13. (Wed 10/16) Midterm
14. (Mon 10/21) Low income support (Chapter 17)
15. (Wed 10/23) continued
16. (Mon 10/28) continued
17. (Wed 10/30) Taxation in practice (Chapter 18)
18. (Wed 11/6) Optimal Taxation I - commodity taxation
Problem set #3 distributed, due in one week
19. (Mon 11/11) Optimal Taxation II - income tax
20. (Wed 11/13) continued
Problem set #3 due
21. (Mon 11/18) Capital income and business taxes (Chapter 22, 23 and 24)
22. (Wed 11/20) continued
23. (Mon 11/25) continued
Problem set #4 distributed, due on 12/4
24. (Mon 12/2) Behavioral responses (Chapter 21)
25. (Wed 12/4) Tax compliance and administration
Problem set #4 due
26. (Mon 12/9) In class final exam