Economics 130: Public Economics
Spring 2024
Course Description: Role of government in the market economy. Alternative justifications for government intervention. Discussion of taxation, public goods provision, political economy issues, government role in education, social security, income maintenance programs, sustainability of national debt.
Office hours: All office hours will be by zoom, but I will likely have an occasional in-person office hour. I will use the same zoom link as we use for lectures. Hours TBD. As we approach exams, I also hold several additional office hours.
LECTURES: The lectures are in-person with zoom livestreaming. It will be recorded and posted on the course website in Media Gallery.
EXPECTATIONS (important!): students are fully expected to show up in person and that the recorded/posted zoom should be considered supplementary for unique circumstances –there is no guarantee of the quality of video. As many of you probably know from previous classes, occasionally the zoom/recording technology fails us (although it is usually reliable). A further “backup” is that I post all of my lecture notes on the course website.
Website link: https://bruinlearn.ucla.edu/courses/183994
Study Questions: Study questions with solutions will be provided. They will be posted on the course website. The study questions are very useful for preparing for the exams. Make sure you do all of the questions. Also, try making up your own questions, perhaps variations on the study questions. In addition to study questions, I will post old exam questions as we approach exams. Roughly one week before each exam I will post an information sheet that contains a variety information including extra office hours, topics on exams, relevant practice questions, etc.
EXAMS: There will be three exams. The weighting of the exams:
First Exam—20% (April 25th, Thursday)
Second Exam-25% (May 16th, Thursday)
Final Exam 55% (June 14, 2024, Friday, 8am-11am)
Exams: Exams must betaken at the scheduled times. As noted above, there will be three exams. The second exam is NOT cumulative. There will not be any other exam time.
Exams will consist of multiple choice questions, fill-in-the-blanks questions, and a small number of (probably only one) essay/problem questions. All exams are open book, open notes. Except for a calculator, all other electronic devices are NOT allowed for the exam (so, for example, no iPad).
Grading: Your grade will be based on the following:
1. Overview, magnitude of government’s role in the economy.
2. Public debt. Is it sustainable?
3. Taxes on output, both per-unit and ad valorem. Burden of tax, determinants of tax burden, efficiency implications of taxation, optimal taxation (Ramsey Rule).
4. Taxes on labor: payroll taxes and income taxes.
5. Taxes on savings.
6. Local Public goods: overview, free-rider problem, efficiency, median voter model, Tiebout model (voting with one’s feet), Vickrey-Clarke-Groves mechanism.
7. Political Economy (“ Public Choice”). Lindahl pricing, majority rules models, voting paradoxes.
8. Education: justification and role of government, human capital, crowding-out effect, vouchers, education and signaling.
9. Social Security: overview, government justification for intervention, model—is it sustainable?, does it crowd out private saving.
10. Income maintenance programs: AFDC, TANF, unemployment insurance, workers comp, EITC.
EXAM RULES: ALL exams must betaken at the scheduled time
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