Faculty of Economics and Business
BACHELOR IN ECONOMICS THIRD YEAR Course
Public Economics
Code
802361
Module
Public Sector Economics
Area
Public Economics
Nature
Compulsory
Attendance
2,7
Non Attendance
3,3
Semester
5
Credits
6
Year
3
COORDINATION DEPARTMENT Economía Aplicada VI
COORDINATOR AND CONTACT Alfonso Utrilla;
[email protected]
% OF TOTAL CREDITS
ATTENDANCE
Lectures
30%
100%
Classes
10%
50%
Tutorials
6%
100%
Assessment activities
4%
100%
Homeworks and class assignments
20%
0%
Time to study
30%
0%
TEACHING ACTIVITIES
Faculty of Economics and Business
SYNOPSIS BRIEF DESCRIPTION The main objective of this course is to provide a global overview about the role and the consequences of public intervention in the economy, focusing on the spending of government and its influence on the allocation of resources and distribution of income. We will focus on the operation of the Spanish system of public finance. Institutional aspects of the Spanish Public Sector. Market failures. Social Choice. Public Choice. Budget and Public Spending Policies. Taxation: Introduction to the General Theory.
PRE-REQUISITES Basic theory of Microeconomics
OBJECTIVES a) To improve the analytical ability of students and develop their capacity for synthesis in the scope of public government economic activity. b) To develop the students’ ability to critically evaluate public policy issues. c) To further develop students’ understanding of the main reasons for considering government intervention in market economics. d) To introduce students to the institutional framework of the Spanish system of public finance. e) To introduce students to the main characteristics of major sources of revenues in the current tax systems as well as the main aspects of the public expenditure programs. f) To develop students’ critical and reflection capacities. g) To enhance students’ synthesis capacities, as well as written and oral communication skills. To foster small group work and enhance students’ presentation skills.
COMPETENCES General: CG1, CG2, CG3 y CG4 Cross-sectional: CT1, CT2, CT3 Specific: CE1, CE6
LEARNING METHODOLOGY A mixed methodology of teaching and learning will be used in all educational activities with the aim of encouraging students to develop a collaborative and cooperative attitude in the pursuit of knowledge.
TOPICS COVERED (Syllabus) This course has been organized in six topics: (i) Institutional Framework, (ii) Market Failures, (iii) Social Choice, (iv) Public Choice, (v) Budget and Public Spending Policies, (vi) Taxation. This course aims at providing the basic concepts used in Public Economic analysis, focusing on the tools of positive and normative analysis within the framework of welfare economics, to analyze the intervention of governments in the economy. In Chapter one we will study the institutional framework and the main indicators of fiscal policy as well as the size and scope of government expenditure. Then, in Chapter two, we will analyze the intervention of governments in the economy. The theory of welfare economics focuses on market failures and distributional considerations as a reason for considering government intervention. Next, in Chapter three, we
Faculty of Economics and Business will analyze equity and the distributional effects. In Chapter four we will analyze the economic principles to the analysis of political decision-making, a field known as political economy. We will discuss whether or not political institutions are likely to respond to market failures with the enhancing efficiency policies derived in previous chapters. Once we have presented the approach that economists use to determine when government intervention is justified in the market economy, Chapter five outlines the main programs of public expenditure, the so called Welfare State, with special reference to Health Care, Education, Housing, Social Security and Income Maintenance Programs. Finally, Chapter six provides a theoretical framework for thinking about tax policy and a discussion of actual tax institutions. Syllabus: Chapter 1. Institutional framework of the Spanish public sector. Budget and fiscal policy indicators. Chapter 2. Market Failures and public intervention instruments. Chapter 3. Equity, redistribution and social welfare. Chapter 4. Public choice and social choice. Chapter 5. Public Expenditure in the Welfare State: in-kind benefits and cash benefits. Chapter 6. Public revenues. The structure of tax systems.
ASSESSMENT Examination (final)
% Share of Final Grade
60 %
Examinations (partial)
% Share of Final Grade
25 %
Individual classwork resolution and midterm exams
Other activities
% Share of Final Grade
15 %
Homework and in class assignments
ASSESSMENT CRITERIA
General criterion: Continuous evaluation through mid-term exams, homework and inclass assignments, participation in debates and a final exam.
Final exam: a. Common exam for all groups. b. Final exam accounts 60% of final grade c. Final exam is divided in two parts: 1) 10 short questions. Time: 60 minutes. 2) 1 question to choose out of two. Time: 30 minutes. - Grading: - First part: Accounts 60% of final exam grade. - Second part: Accounts 40% of final exam grade. - Required minimum score in both parts of final exam: 4. If the mark in the final exam is less than 4, the obtained mark will be the final mark in this course.
Other evaluation criteria: - Homework - Midterm exams - Active class participation.
Any student not attending at final exam will be graded as “Not Taken” (including June
Faculty of Economics and Business and “convocatoria extraordinaria” exams). This applies even though he/she has totally/partially participated in the continuous assessment. Continuous assessment in the extraordinary examination: in case one student has failed the ordinary examination, having attended the final exam and participated in the continuous assessment, the mark to be considered as continuous assessment for that extraordinary examination will be the final mark obtained in the ordinary examination.
TIMETABLE Week Week 1 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12
Week 13 Week 14
Week 15
Hours 1 session (2 hours) 5 sessions (10 hours) 1 session (2 hours) 6 sessions (12 hours) 1 session (2 hours) 2 sessions (4 hours) 2 sessions (4 hours) 4 sessions (8 hours)
1 session (2 hours) 2 sessions (4 hours) 1 session (2 hours)
Session Topic(s) Presentation Chapter 1. Institutional framework of the Spanish public sector. Budget and fiscal policy indicators. Practical classes 1 Chapter 2. Market Failures and public intervention instruments. Practical classes 2 Chapter 3. Equity, redistribution and social welfare. Chapter 4. Public choice and social choice. Chapter 5. Public Expenditure in the Welfare State: in-kind benefits and cash benefits (Social insurance and income maintenance) Practical classes 3 Chapter 6. Public revenues. The structure of the tax systems. Tax principles. Practical classes 4
RESOURCES BASIC BIBLIOGRAPHY Rosen H.S., Gayer, T. (2013) Public Finance. McGraw Hill.
COMPLEMENTARY BIBLIOGRAPHY
Stiglitz, J.E. (2015): Economics of the Public Sector, 4rd edition. W. W. Norton & Company Albi, González Páramo y Zubiri (2009) Economía Pública I y II. Tercera edición. Ed Ariel.
Faculty of Economics and Business
OTHER RESOURCES Slides, readings, problem sets and other course materials will be posted at the UCM CAMPUS VIRTUAL. Web pages: Ministerio de Economía y Hacienda: www.minhap.gob.es Intervención General de la Administración del Estado: www.igae.pap.minhap.gob.es Instituto de Estudios Fiscales: www.ief.es Bases datos de la OCDE www.ocde.org Bases datos de EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home
