This course offers an introduction into the public economics theory. It does not aspire to cover theories of taxation, public expenditures, regulation etc. at length and in-depth. Rather, our ambition is to give a bird's-eye view of central themes of public economics and related disciplines, and teach concepts, logic, and ideas, rather than methods of analysis, which would require an entirely different course format. Our choice of topics covered by the course reflects a trade-off between salience and centrality, on the one hand, and suitability for a brief online introductory course, on the other. The course content is neither comprehensive (which would be a "mission impossible" for virtually any public economics course"), nor representative of other such courses. With these limitations and caveats in mind, we encourage our students to continue their public economics studies in a more regular fashion, and see our role inter alia in motivating interest in such "continued education". The central theme of the course is the role of government as a mechanism of resource allocation which complements and augments markets. Governments are viewed as public agencies set to correct market failures. Such agencies however are prone to failures of their own, and hence markets and governments are two imperfect alternatives. We deal with government's limitations, with particular emphasis on those that have to do with informational asymmetry, limited administrative capacity, and imperfect accountability to society. Otherwise the course's man themes are economics of taxation, regulation, politics of public economics, incentives in government, and government vis-à-vis (civil) society.
- Week 1 - Introduction
- Week 1 - Government in a Market Economy
In this lecture we discuss reasons calling for government presence in market economies. We stress key advantages of markets over governments which make privately taken decisions highly efficient in the absence of externalities. The latter significantly distort...
- Week 2 - Design of Government: A Tax Theory Primer
This lecture covers the positive and normative theories of taxation, ways and means to collect public revenues, and existing informational, administrative, political constraints governments have to deal with. We consider lump sum tax as first best option whic...
- Week 3 - Scope of Government
In this lecture we discuss how governments perform their key functions such as public regulation and public service delivery using three cases. In the first case, we discuss alternative means to control externalities by considering situations when private firm...
- Week 4 - Politics of Public Economics
This lecture begins with an analysis of how public economic policies differ from each other in democracies and autocracies. We next turn to politics of public economics in democracies and begin with the classical result about non-existence of a universal rule ...
- Week 5 - Working of the Government
In this lecture we discuss external and internal agency problems, i.e. relations between government (as an agent) and society (the principal) and between rank-and-file bureaucrats (the agents) and their bosses (the principals). We discuss ex ante and ex post a...
- Week 6 - Government and Society
In this final lecture of the course we discuss the role of society in public sector economics. We start with the notion of social capital and show its duality: its substitutional and complementary relations to government. Our first illustration of the interpla...
Department of Applied Economics