Public Economics

STUDENTS ARE EXPECTED TO HAVE COMPLETED

1. MATHEMATIC ANALISYS, INCLUDING AN INTRODUCTION TO CONSTRAINED OPTIMIZATION

2. INTERMEDIATE MICROECONOMICS, INCLUDING AN INTRODUCTION TO GENERAL EQUILIBRIUM

TO DISPELL ANY DOUBTS:

1. THE FIRST DAY OF CLASS YOU WILL BE GIVEN A SET OF REVIEW PROBLEMS, PART OF WHICH WILL BE DUE THE FOLLOWING WEEK.

TO PROVIDE THE NECESSARY INCENTIVES, REVIEW PROBLEMS WILL ALWAYS GET DOUBLE MARK.

2. STUDENTS ARE SUPPOSED TO BE FULLY ACQUAINTED WITH THE FOLLOWING TOPICS:

I. GENERAL EQUILIBRIUM

III. INDIVIDUAL CONSUMER BEHAVIOR

IV. INDIVIDUAL FIRM BEHAVIOR

V. PARTIAL EQUILIBRIUM

COMPETENCES AND SKILLS THAT WILL BE ACQUIRED AND LEARNING RESULTS.

Students of this subject will acquire knowledge and understanding in the following four areas.
I. STATE INTERVENTION
. Knowledge of the variety of situations in which the free market leads to inefficient outcomes or a socially unacceptable distribution of wealth or resources, paving the way for an economic justification for state intervention.
. Understanding of possibilities and difficulties associated with state intervention: public goods, externalities, asymmetric information, and redistribution.
II. SOCIAL CHOICE
. Awareness of the fundamental difficulties in any attempt to aggregate individual preferences for public or collective decisions.
. Familiarity with how to reconcile the idea of economic efficiency and distributional equity in spite these difficulties.
III. INCIDENCE, EFFICIENCY AND EQUITY IN THE TAX SYSTEM
. Acquaintance with the idea that the tax burden does not necessarily falls on the economic agent liable to pay the tax.
. Awareness that any tax policy that alters the economic activities¿ relative prices results in the impoverishment of the economy. Awareness that the distorting change in their behavior that involves a welfare loss is known as the excess burden.
. Ability to analyze the excess burden in three basic cases: the choice of a consumer good or service versus all other goods, the choice between consumption and leisure, and the choice in an inter-temporal consumption model.
IV. FISCAL SYSTEM STRUCTURE AND THE IDEA BEHIND LA REFORMA FISCAL.
. Knowledge of the structure and the basic problems plaguing the income tax of individuals, corporation tax, contributions to social security tax, and value-added tax and inheritance transfers.
. Knowledge of the basic ideas on fiscal decentralization.
. Knowledge of the basic economic ideas that are envisaged under the banner of "Tax Reform".
This knowledge and understanding will be complemented by the following skills:
. Ability to analyze the design of the tax system.
. Ability to defend and justify personal beliefs on public economics and the tax system.
. Ability to maintain a critical and analytical perspective and to distinguish between the positive and normative elements of political debate.

LEARNING ACTIVITIES AND METHODOLOGY

There will be a final exam (60%) as well as continuous evaluation. The latter consists of a set of exercises that students are supposed to hand in on a weekly basis (10%), student presentations of certain parts and some tests (30%)

BASIC BIBLIOGRAPHY

J. Mirrlees,. S. Adam, T. Besley, R. Blundell, S. Bond, R. Chote, M. Gammie, P. Johnson, G. Myles and J. Poterba, . Tax by Design: The Mirrlees Review, Oxford University Press, . 2011(http://www.ifs.org.uk/mirrleesReview/design) (Mirrlees)

Stiglitz, . Joseph, . Economics of the Public Sector,. Third Edition