PhD in Public Policy and Administration
Università Bocconi
Academic Year 2015-16
Public Economics and Finance
Professor Paola Profeta
Course Description
This course provides a general introduction to the theory and practice of public economics and
finance. The course combines theoretical models with empirical evidence. The instructor will
present the main questions addressed and selected tools used in public economics. These tools
are then applied to the spheres of public revenues (taxation) and public expenditure. Students
will receive readings and they are required to prepare a presentation in class.
The course is organized in 12 sessions (1,5 hour each).
Classes are held in Aula 4C, Sarfatti, 4th floor.
Detailed Description of Assessment Methods
60% final written exam; 40% presentation
Contact
E-mail: [email protected]
Office: 3 b1-03, Via Roentgen 1
Office hour: By appointment
Course outline
Lesson 1: 9/2, 8.45
Introduction and background
This session introduces the study of public economics and its importance for our understanding of
how government intervenes in the economy, what are the consequences, what are the desired
outcomes and how they affect individuals and the society at large. We also discuss the
international scenario on taxes and expenditures and present data.
Material: Teacher’s note
Lesson 2: 10/2, 8.45
The Public finance approach
This session presents the main questions of the public economic approach, it explains the
equity/efficiency trade-off and the two welfare theorems. Failures of the market are also
discussed.
Material: Teacher’s notes
Lesson 3 and 4: 18/2, 8.45 AND 10.30
The Public choice and political economy approach
The public choice approach goes beyond the economic one. We present the main features of this
approach, and discuss specific cases. We introduce the basic methodology from Arrow’s
impossibility theorem to the median voter theorem and its applications to the analysis of
redistributive policies. We also introduce probabilistic voting games.
Material: Teacher’s notes
Lesson 5 and 6: 25/2, 8.45 and 10.30
Taxation
We first introduce the basic concepts of taxation in public economics and discuss the effects of
taxes on labour supply. Then, we students are required to read and prepare a presentation of the
following readings focused on two angles of analysis: comparative tax analysis and tax reforms.
Readings:
Kenny, L.W. and Winer, S.L. “Tax systems in the world: an empirical investigation into the
importance of tax bases, administration costs, scale and political regime” (2006) International Tax
and Public Finance 13 (2/3), 181–215.
Profeta, P., Puglisi, R. and Scabrosetti, S. “Does Democracy affect taxation and public spending?
Evidence from Developing countries” (2013) Journal of Comparative Economics 41: 684-717.
-Castanheira, M., Nicodème, G. and Profeta, P. “On the Political economics of tax reforms: survey
and empirical assessment” (2012), International Tax and Public Finance 19(4): 598-624.
Profeta, P. “Political Support and tax reforms with an application to Italy” (2007) Public Choice 131
(1-2), 141-55.
Lesson 7: 2/3, 8.45
Education: inequality and social mobility
After a brief introduction, students are required to read and prepare a presentation of the
following readings.
Readings:
OECD, Going for growth. “A Family Affair: Intergenerational Social Mobility across OECD
Countries” (2010), chapter 5.
Piketty, T. And Saez, E. “Inequality in the Long Run” (2014), Science 344 (6186): 838-844.
Lesson 8 and 9: 3/3, 8.45 and 10.30
Social Security
We first discuss the main features of pension systems, and sum up the main theories that explain
them. Then, students are required to read and prepare a presentation of the following readings,
which focus on social security, reforms and the ageing process.
Readings:
Barr, N. and Diamond, P. “Reforming Pensions: Principles, Analytical errors and policy directions”
(2009) International Social Security Review 62(2): 5-29.
Gruber, J. and Wise, D. “Social security programs and retirement around the world: Fiscal
implications. Introduction and summary”. NBER WP 11290.
-V.Galasso and P. Profeta “Population Ageing and the Size of the Welfare State” in “International
Handbook of Ageing and Public Policy” (2014), Edward Elgar.
Galasso, V., Gatti, R. and Profeta, P. (2009) “Investing for the old age: Pensions, children and
savings”, International tax and Public Finance 16(4): 538-559.
Lesson 10 and 11: 10/3, 8.45 and 10.30
Gender policies. The case of quotas: firms and politics
After a brief introduction, students are required to read and prepare a presentation of the
following readings, which focus on the consequences of gender quotas.
Readings
TO BE DEFINED
Lesson 12: 16/3, 8.45
Wrap up and discussion
Exam: TO BE DEFINED