Public Finance:  Economics 445

Professor Paul Rothstein
Office:  Eliot Hall 321D
Phone:   935-4352

This is a course in the economics of the public sector.  We study the economic rationale for government activity, which provides a foundation for the economic analysis of public policy.  We also study particular spending and tax policies and examine the insights and limitations of the economic analysis of these policies.

The economic perspective on markets and governments is that they are both institutions for allocating resources.  They are arguably much more than that.  Economics is distinctive in focusing on this particular aspect, but it is an important aspect, and placing both institutions in one simple framework ensures that the analysis is at least internally consistent.  When we do branch beyond very narrow economic criteria, we will try not to hold the two institutions to different standards, ignore the weaknesses of one or the strengths of the other, apply inconsistent principles, or do any of the other things that make for lively cable television.

This class fulfills the requirement of the Economics major that a student take two classes with a prerequisite of Economics 401 or 402.  This means that this course is a "capstone" for the major -- an opportunity to synthesize what you have learned so far and take it to the next level.  We will review, extend, and use the full box of analytical tools that are presented in the prerequisite classes.  Expect a worthwhile challenge.

Economics 103B, 104B, 401; Math 131.  Calculus and price theory will be used in about one-third of the course.  We will review basic material and develop some extensions in the first couple of weeks.

Textbook and Course Reader
Jonathan Gruber, Public Finance and Public Policy, 2nd Edition.
Purchase the Course Reader from the Department of Economics (205 Eliot Hall).  The Course Reader will come in two parts.

There will be four homework sets, each worth 5% of the grade (for a total of 20%).  A paper worth 15% of your grade will be assigned and due in the first half of the course.  A late midterm worth 25% of the grade will be given in class.  The final exam is worth 40% of the grade and will take place May 8, 1:00-3:00pm, during finals week.  Class participation will count in borderline situations, at my discretion.

A Few Rules

Last updated 1/15/07.