Econ 344 - Public Finance
Department of Economics, IowaStateUniversity
Fall 2007 TTH 11:00- 12:15
Dr. Daniel Otto,
166c Heady Hall
294-6147
Office Hours: TTh 12:30-2:00 & by arrangement
Website:
Room: East Hall 111
COURSE DESCRIPTION
Public Finance is the branch of economics that studies the role of the public sector in the economy. In this course, we will study the intellectual foundations that justify the existence of the public sector, and the economic theory that describes what the role of the public sector should be. We will then look at what the U.S. public sector actually does, and how it affects individual and corporate decision-making and welfare.
Prerequisite:Econ 101
Textbooks
Required:Public Finance, Harvey S. Rosen, McGraw-Hill, 8th ed., 2005.
Recommended:Finance and Public Policy, Jonathan Gruber, Worth Publishers, 2004.
Other books referenced will include State and Local Public Finance, Ronald C. Fisher, 3rd edition. There will also be recommended reading from academic journals. Many of these will be available for download from the website. Some material that is not in the text will be presented in the lecture.
Exams, Papers and Grades
The course will include:
-three in-class Midterm Exams (Th, 9/27Tu, 10/30, and Th Nov. 29) each worth 22% of the final grade,
-a Final Exam (Th Dec. 13th, 9:45 a.m.) worth 10% of the final grade,
-six problem sets worth 3% each, and
-a team work project 10% of the final grade.
Major Public Policy Issues examples:
A. Health Care reform
B. Social Security Reform (ie fiscal solvency of system)
C. Medicare Reform
D. Property Tax reform in Iowa
By the end of the second week we will have identified several major public policy issues that we will focus on. Teams will be formed to prepare an analysis, write-up and presentation to the class. Write ups, 8-10 pages in length, will be individual, but presentation will be as a team.
COURSE OUTLINE
Introduction
A.Background (Rosen, Ch. 1, 2)
B.Welfare Economics (Rosen, Ch. 3)
PART I: Is There a Role for the Government?
A.Public Goods (Rosen, Ch. 4)
B.Externalities (Rosen, Ch. 5)[Homework #1 due]
Tues. Sept. 4,2007 Guest speaker: Prof. Mark Edelman on Dealing with Externalities
PART II: Political Economics and Federal System
A.Voting and Political Economics (Rosen, Ch. 6)
B.Cost Benefit Analysis (Rosen Ch. 8)[Homework #2 due]
MIDTERM EXAM #1 – Thur, September 27
PART III: Government Expenditure
A.Health Care—markets, role of insurance, reform options (Rosen, Chs. 9, 10)
B.Social Security and Unemployment Insurance (Rosen, Ch. 11)
Guest Speaker – Amy Harris, Iowa Dept. of Revenue
C.Redistribution (Rosen, Ch. 12)
D.Poverty Programs (Rosen, Ch. 13)[Homework #3 due]
PART IV: Taxation
A.What is a Good Tax?
Tax Incidence (Rosen, Ch. 14)
Equity and Efficiency (Rosen, Ch.15, 16)[Homework #4 due]
MIDTERM EXAM #2 – Tuesday, October 30
B.The U.S. Tax System
Personal Income Taxes (Rosen, Ch. 17, 18)
Corporation Taxes (Rosen, Ch. 19)
Deficit Finance (Rosen, Ch.20)
Consumption and Wealth Taxation (Rosen, Ch.21)[Homework #5 due]
Part V: State and Local Taxation
(Rosen, Ch. 22)
(Fisher, State and Local Public Finance)
A.Revenue sources
Property Taxes
Sales and Excise Taxes ---Guest Lecture—Mike Lipsman, PhD, Ia.Dept. of Revenue
Income and Other Taxes
B.State and Local Fiscal Issues
Education -----Guest Lecturer, Mr. Dwayne Ferguson, Legislative Services Agency
Health and Welfare
Economic Development[Homework #6due]
MIDTERM EXAM #3 – Thursday, November 29
Tues Dec 4 and Thurs. Dec 6 project presentation
Required or recommended readings from academic journals are listed on the class webpage.
FINAL: Dec. 13, 2007, 9:45-11:45. Room: East Hall 111
If you have a disability and require accommodations, please contact the instructor early in the semester so that your learning needs may be appropriately met. You will need to provide documentation of your disability to the Disability Resources (DR) office, located on the main floor of the StudentServicesBuilding, Room 1076, 515-294-6624.