Public Economy
Code: 106194 ECTS Credits: 6| Degree | Type | Year | Semester |
|---|---|---|---|
| 2504216 Contemporary History, Politics and Economics | OB | 2 | 1 |
Contact
- Name:
- Maria Cervini
- Email:
- maria.cervini@uab.cat
Use of Languages
- Principal working language:
- english (eng)
- Some groups entirely in English:
- Yes
- Some groups entirely in Catalan:
- No
- Some groups entirely in Spanish:
- No
Prerequisites
A basic microeconomic theory course, e.g, Introduction to Economics I, is a prerequisite to register for this Public Sector Economics course.
Objectives and Contextualisation
This course is a standard introduction to Public Sector Economics. Public Finance, or equivalently Public Economics, is the study of the effects of government actions on economic activity. The course thus aims at predicting the effects of such actions in order to provide guidance on the choice between different alternatives. The objective is to provide a toolbox with which to approach in a rigorous way a variety of issues related to the design and evaluation of public policy.
Competences
- Innovate in the methods and processes of this area of knowledge in response to the needs and wishes of society.
- Manage and apply data to solve problems.
- Recognise institutional and regulatory design and the main economic policies implemented in current economies on different scales to manage economic growth and its cyclical oscillations.
- Students must be capable of applying their knowledge to their work or vocation in a professional way and they should have building arguments and problem resolution skills within their area of study.
- Students must be capable of collecting and interpreting relevant data (usually within their area of study) in order to make statements that reflect social, scientific or ethical relevant issues.
- Students must develop the necessary learning skills to undertake further training with a high degree of autonomy.
- Work cooperatively in multidisciplinary and multicultural teams implementing new projects.
Learning Outcomes
- Assessing the role of the public sector as an economic agent.
- Collect and process data to critically analyse the process of formulating the public agenda.
- Collectively analyse public policies from a multidisciplinary perspective both in the process of production and implementation.
- Critically arguing the operations of the institutions and economic actors.
- Describe forms of public intervention in the economic system.
- Diagnosing specific situations and economic problems.
- Explaining the main characteristics of the economic policies of western governments.
- Identify situations in which a change or improvement is needed.
- Specifying the roles, dimensions and structure of the public sector in the economy.
- Students must be capable of applying their knowledge to their work or vocation in a professional way and they should have building arguments and problem resolution skills within their area of study.
- Students must be capable of collecting and interpreting relevant data (usually within their area of study) in order to make statements that reflect social, scientific or ethical relevant issues.
- Students must develop the necessary learning skills to undertake further training with a high degree of autonomy.
Content
1. INTRODUCTION
The public sector as an economic agent. The nature of the economic effects of public policy: allocation, distribution and stabilization. Positive versus normative analyses. Criteria for evaluating public policy: economic efficiency, equity, paternalism and individual freedom. Trade-offs among objectives.
2. THE PUBLIC SECTOR IN SPAIN
Agents and activities of the public sector. Indices of public sector dimension. The budget of the public sector in Spain: Presupuestos Generales del Estado. Budget concepts and processes. Indices of budget policy.
3. WELFARE ECONOMICS AND THE ROLE OF PUBLIC SECTOR
The Fundamental Theorems of Welfare Economics. Market failure as a rationale for public intervention: public goods, externalities, increasing returns to scale, incomplete information, non-existence of markets, unemployment and inflation. Normative theories of the State and redistribution.
4. INCOME REDISTRIBUTION
Separating allocation and redistribution issues. Rationales for income redistribution: the utilitarian approach, the maximin criterion, Pareto-optimal redistribution, non-individualistic views, fair processes, social mobility. Conceptual problems with measuring equity. The incidence of public spending. Cash and in-kind transfers. The limits to redistribution: efficiency, equity and incentive-compatibility.
5. EXTERNALITIES
The nature of externalities. Positive and negative externalities. Technological and pecuniary externalities. Mechanisms for internalizing externalities: Pigouvian taxes and subsidies, pollution permits, establishing property rights, regulation. The Coase theorem. Externalities and non-convexities. Marginal and inframarginal externalities. Implications for income distribution.
6. PUBLIC GOODS
Public or collective goods and private goods:non-rivalry and non-excludability. Efficient provision of public goods. The “free-rider” problem. Wicksell’s unanimity rule and Lindahl prices. Efficiency in collective consumption of private goods.
7. NATURAL MONOPOLY AND IMPERFECT COMPETITION
Imperfect competition and monopoly. Efficiency effects and potential welfare gains. Decreasing average costs, public utilities and natural monopoly. Efficiency, equity and profitability as objectives for public sector pricing. Asymmetric information and regulation.
8. COLLECTIVE CHOICE AND PUBLIC SECTOR BEHAVIOUR
The problem of collective choice. Arrow’s (im)possibility theorem. Consequences and alternatives. Majority rule and public goods provision. The median voter theorem. Unidimensional and multidimensional issues. Logrolling. Preference revelation mechanisms for public goods. Direct democracy and representative democracy. The “cast ofcharacters” in the public sector. The role of political representatives. Organization and Incentives in the public sector: from the models of bureaucracy of Niskanen and Migué-Bélanger to the modern theories about the structure and behaviour of agencies. Pressure groups. The theory of government failure.
9. EFFICIENCY IN THE PUBLIC SECTOR
An approach to productive efficiency: technical and allocative efficiency. The analysis of public efficiency. Evaluating efficiency in the public production of goods and services: Cost-Benefit Analysis and Cost-Effectiveness Analysis. Input- and output-oriented measures of technical efficiency. Frontier analysis and Data Envelopment Analysis. The design of institutions for efficiency control in the public sector.
10. COST-BENEFIT ANALYSIS
Cost-Benefit Analysis as applied Welfare Economics. Criteria for project appraisal. Identifying and quantifying the effects of public projects. Valuing social costsand benefits. Market prices, shadow prices and intangibles. The choice of the social discount rate. The role of distributional considerations. Risk and uncertainty.
11. SOCIAL SECURITY
The social security pension system. The case for the existence of a pension sytem. Two different approaches: intertemporal allocation versus intratemporal redistribution. Consequences for institutional design. The operation of a pay-as-you-go and a fully-funded system. Effects on saving and labour-supply. The “bankruptcy” of social security. The reform of social security.
12. OTHER EXPENDITURE PROGRAMMES
Unemployment insurance. Health programs. Education policy. Objectives and instruments. Public versus private provision. Failures of private markets for insurance. Moral hazard and adverse selection. Unemployment and social exclusion. Minimum income programmes and redistribution. Poverty traps. Family support programmes
Methodology
Teaching will be offered on campus.
The purpose of the distribution and combination of the formative activities between the headings Autonomous, Directed and Supervised is to optimize the result of each one.
The proposed teaching methodology may undergo some modifications according to the restrictions imposed by the health authorities on on-campus courses.
Annotation: Within the schedule set by the centre or degree programme, 15 minutes of one class will be reserved for students to evaluate their lecturers and their courses or modules through questionnaires.
Annotation: Within the schedule set by the centre or degree programme, 15 minutes of one class will be reserved for students to evaluate their lecturers and their courses or modules through questionnaires.
Activities
| Title | Hours | ECTS | Learning Outcomes |
|---|---|---|---|
| Type: Directed | |||
| Lectures | 33 | 1.32 | 3, 4, 1, 5, 6, 9, 7, 8 |
| Practice sessions | 16.5 | 0.66 | 3, 1, 12, 10, 11, 2 |
| Type: Supervised | |||
| Tutorials and essays' supervision | 12 | 0.48 | 12, 10, 11 |
| Type: Autonomous | |||
| Study and information collection | 88.5 | 3.54 | 8, 12, 10, 11 |
Assessment
Calendar of evaluation activities
The dates of the evaluation activities (midterm exams, exercises in the classroom, assignments, ...) will be announced well in advance during the semester.
The date of the final exam is scheduled in the assessment calendar of the Faculty.
"The dates of evaluation activities cannot be modified, unless there is an exceptional and duly justified reason why an evaluation activity cannot be carried out. In this case, the degree coordinator will contact both the teaching staff and the affected student, and a new date will be scheduled within the same academic period to make up for the missed evaluation activity." Section 1 of Article 115. Calendar of evaluation activities (Academic Regulations UAB).
Grade revision process
After all grading activities have ended, students will be informed of the date and way in which the course grades will be published. Students will be also be informed of the procedure, place, date and time of grade revision following University regulations.
Retake Process
"To be eligible to participate in the retake process, it is required for students to have been previously been evaluated for at least two thirds of the total evaluation activities of the subject." Section 3 of Article 112 ter. The recovery (UAB Academic Regulations). Additionally, it is required that the student to have achieved an average grade of the subject between 3.5 and 4.9.
The date of the retake exam will be posted in the calendar of evaluation activities of the Faculty. Students who take this exam and pass, will get a grade of 5 for the subject. If the student does notpass the retake, the grade will remain unchanged, and hence, student will fail the course.
Irregularities in evaluation activities
In spite of other disciplinary measures deemed appropriate, and in accordance with current academic regulations, "in the case that the student makes any irregularity that could lead to a significant variation in the grade of an evaluation activity, it will be graded with a 0, regardless of the disciplinary process that can be instructed. In case of various irregularities occur in the evaluation of the same subject, the final grade of this subject will be 0". Section 10 of Article 116. Results of the evaluation. (UAB Academic Regulations).
Exam rescheduling request
To request a change in the officially scheduled exam, you must submit the following form along with adequate supporting documentation. Remember that the application is subject to approval by the coordinator. Approval depends on the reason for the application, the submission of supporting documents, and the history of the student with respect to previous rescheduling requests. In case of overdue situations the request for reprogramming of tests must be made within 5 calendar days immediately after the date of the test. The bachelors' degree coordinator will have 48 hours to assess the request and respond.
Exam rescheduling is restricted to a serious medical or psychological condition (surgeries, accidents and other serious situations), legal affairs (with official subpoena or court order), official affairs (examinations to become a civil servant) and the decease of a close family member. In all cases, supporting documents will be attached. In the case of a medical justification, if reporting minor problems that may have different intensities, the certificate should specify that the student is not in a position to take an exam.
The official exam calendar is published before the beginning of the course. Therefore, work-related circumstances and those derived from participation in mobility programs will not be considered a valid reason. Personal reasons (driving tests, travelling and other) are not valid reasons either for an exam to be rescheduled.
You will receive an email notifying you of whether your request has been approved. If approved you should contact your professor for rescheduling the exam.
The proposed evaluation activities may undergo some changes according to the restrictions imposed by the health authorities on on-campus courses.
Assessment Activities
| Title | Weighting | Hours | ECTS | Learning Outcomes |
|---|---|---|---|---|
| Exercises | 20% | 0 | 0 | 3, 4, 5, 6, 12, 11, 2 |
| Final Exam | 40% | 0 | 0 | 4, 1, 5, 6, 9, 7, 10, 11 |
| Parcial exam | 40% | 0 | 0 | 4, 1, 5, 6, 9, 7, 8, 10, 11 |
Bibliography
GRUBER, J. (2016), Public Finance and Public Policy, 5th ed., New York: Worth Publishers.
HINDRIKS, J. and MYLES, G.D. (2013), Intermediate Public Economics, 2nd. ed., Cambridge and London: The MIT Press.
ROSEN, H.S. and GAYER, T. (2014), Public Finance, 10th ed., New York: McGraw Hill.
STIGLITZ, J.E. and ROSENGARD, J.K. (2015), Economics of the Public Sector, 4th, New York and London: Norton & Company.
Software
No especific program