Economics
130:
Government Finance
California
State University, Sacramento
Department of Economics
College of Social Sciences and Interdisciplinary Studies
Spring 2005
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In government finance we will analyze government spending and taxation.
Economics of the public sector considers the implications of
government activity on the behavior of individuals.
Application of microeconomic models to government programs, such
as welfare and social security, will help us understand how individuals
should theoretically respond to changes in policy.
But do people actually behave the ways we would expect?
Consideration of empirical research will illustrate how people
respond to policy. The
government also has many options for raising revenue.
What is the most efficient way to tax individuals?
Should the government use a flat tax, sales taxes, or our
current tax system? If we
reduce taxes, who should get the tax breaks and how should they be
distributed? This course
will provide a framework for answering these questions, and many more.
Using economic tools to understand current policy issues will be
a special focus of the course.
·
To
gain a firm grasp of economic concepts and to understand how they can
apply to policy making, your understanding of current events, and to
your own life.
·
To
recognize the impact of government policy on the behavior of consumers
and producers.
·
To
become familiar with recent research on current topics in public sector
economics.
·
To
gain an appreciation for the value of economic reasoning and research
as it can apply to policy decisions, but to also recognize the
limitations of its application.
You
are expected to come to class prepared to participate in class
discussions. Completion of required readings prior to class meetings is
crucial to your understanding of the material, and necessary for your
contribution to the learning environment.
Attendance is also essential for success in this course.
The material highlighted in lecture will be most important for
doing well on exams and problem sets.
Out of
courtesy for your instructor and your classmates, arrive to class on
time. Turn off pagers and
cell phones during class.
All students are expected to adhere to the University Student Code of Conduct outlined in the CSUS University Policy Manual. If you have questions regarding academic honesty, plagiarism and the appropriate way to give credit to sources in any work you submit, review the Policy Manual or confer with the instructor. Academic dishonesty is not tolerated, will be reported to Judicial Affairs, and will result in a failing grade. Please read the policy manual carefully at: http://www.csus.edu/admbus/umanual/UMA00150.htm
You must also be aware of current events, preferably through reading the Wall Street Journal, the New York Times (www.nytimes.com), or the Washington Post (www.washingtonpost.com). If you would like to subscribe to the Wall Street Journal at a student rate, contact me by the end of the first week of class
Your
grade for the course will be based on participation (10%), problem sets
(20%), a midterm (20%), a paper (20%), and a final exam (30%).
Class
Participation (10%): Attendance and participation are crucial for success in this
class. I encourage you to
participate in class discussion and ask questions if topics are
unclear. One of the best
ways to solidify your understanding of economic concepts is through
trying to explain those concepts to others.
You will have this opportunity through class discussion and
problem sets. I encourage
you to work together on problem sets, but I expect you to turn in
original work that is in your own words.
Problem
Sets (20%): Problem sets will be given throughout the semester to
reinforce your understanding of the material.
Problem
sets are due at the beginning of class.
Late
problem sets will not be accepted.
You
will have more than a week to complete each problem set, so you should
turn the problem set in early if you think you will have trouble
getting to class on time. Problem
sets turned in after class begins will lose 3 points out of 40.
Problem sets will not be accepted after the end of the lecture.
Midterm
(20%): One midterm exam will be given.
You may not use your book or your notes on the midterm.
Paper
(20%): One goal of this course is for you to learn to
critically examine economic research, and recognize its value in public
policy. You will write a
paper, of no more than 5 pages in length, on a policy topic of your
choice. I would like
for you to pinpoint an area of government inefficiency and propose an
alternative to the status quo.
You will use economic research in defense of your policy
prescription. Select one
or two journal articles relating to your policy topic and describe how
they support your policy suggestion.
Final
Exam (30%): The final exam will be cumulative.
You may not use your book or your notes on the final.
Make-up
Exam Policy: Exams must be taken at the scheduled times.
A student who misses an exam due to a serious medical or
job-related emergency must inform me and provide documentation as soon
as possible, no later than the end of the following class meeting.
Reading assignments are from the text
Public Finance, 7th Edition by Harvey S. Rosen.
| Tuesday, January 25 | Introduction to our Government |
| Read Chapter 1 | |
| Thursday, January 27 | Review of Budget Constraints and Indifference Curves |
| Read the Appendix to the book, pages 542-565. | |
| Tuesday, February 1 | Tools of Empirical Analysis |
| Read Chapter 2 | |
| Thursday, February 3 | Tools of Empirical Analysis |
| Read Chapter 2 | |
| Tuesday, February 8 | Edgeworth Box and Fundamental Theorem |
| Read Chapter 3 | |
| Thursday, February 10 | Public Goods |
| Read Chapter 4 | |
| Tuesday, February 15 | Externalities |
| Problem Set 1 Due | Read Chapter 5 |
| Thursday, February 17 | Voting Systems |
| Read Chapter 6 | |
| Tuesday, February 22 | Income Redistribution |
| Read Chapter 7 | |
| Thursday, February 24 | Welfare, Medicaid, Food Stamps and the EITC (Part 1) |
| Read Chapter 8 | |
| Tuesday, March 1 | Welfare, Medicaid, Food Stamps and the EITC (Part 2) |
| Read Chapter 8 | |
| Thursday, March 3 | Social Security |
| Read Chapter 9 | |
| Tuesday, March 8 | Medicare |
| Problem Set 2 Due | Read Chapter 10 |
| Thursday, March 10 | Review |
| Tuesday, March 15 | Midterm Exam |
| Thursday, March 17 | Exam Review and Government Spending Wrap-up |
| ***SPRING BREAK*** | |
| Tuesday, March 29 | Cost Benefit Analysis, Part I |
| Read Chapter 11 | |
| Thursday, March 31 | Cost Benefit Analysis, Part II |
| Read Chapter 11 | |
| Tuesday, April 5 | Tax Incidence |
| Read Chapter 12 | |
| Thursday, April 7 | Excess Burden from a Tax |
| Paper Proposal Due | Read Chapter 13 |
| Tuesday, April 12 | Optimal Taxation |
| Read Chapter 14 | |
| Thursday, April 14 | Personal Income Taxes |
| Problem Set 3 Due | Read Chapter 15 |
| Tuesday, April 19 | Impact of Taxes on Behavior (Part 1) |
| Read Chapter 16 | |
| Thursday, April 21 | Impact of Taxes on Behavior (Part 2) |
| Read Chapter 16 | |
| Tuesday, April 26 | The Corporate Tax |
| Paper Due | Read Chapter 17 |
| Thursday, April 28 | Deficit Finance |
| Read Chapter 18 | |
| Tuesday, May 3 | Consumption and Estate Taxes |
| Problem Set 4 Due | Read Chapter 19 |
| Thursday, May 5 | Federal, State and Local Governance |
| Read Chapter 20 | |
| Tuesday, May 10 | Review |
| Thursday, May 12 | Review |
ECON 130 Paper Assignment
Spring 2005
Government Inefficiency and Policy Implications of Economic Research
One goal of this course is for you to learn to critically examine economic research, and recognize its value in public policy. You will write a paper, of approximately 5 pages in length, on a policy topic of your choice. I would like for you to pinpoint an area of government inefficiency and propose an alternative to the status quo. You will use economic research in defense of your policy prescription. Select one or two journal articles relating to your policy topic and describe how they support your policy suggestion. You may want to cover some or all of the following.
· Define the government inefficiency and describe your suggested policy solution.
· Discuss how economics relates to your policy. Perhaps apply economic theory covered in class.
· Describe ways of testing how beneficial your policy would be for society, and explain how it is tested in the journal article.
· Discuss what economic theory suggests would occur in the absence of government intervention. Defend the existence of your program or policy.
· Describe benefits to society arising from your policy.
· Why would your policy be an improvement over current practice?
· What are some alternative policies, and why is yours best?
· Discuss limitations of the economic research. What assumptions did the author make? How applicable is the analysis to the real world?
You have complete flexibility in the way you form your paper. It could be a letter to a politician, a policy analysis for a government agency designed for distribution to congress, or a more technical review designed for academic discussion.
On Thursday, April 7, you will turn in one page with your topic, and a paragraph about what you plan to say in your paper. Also list any references you are planning to use.
The final paper is due on Tuesday, April 26th.
Required: The text for the course this
semester is
Public Finance, 7th Edition by Harvey S. Rosen.
You can purchase books through the Hornet Bookstore. Check their Distance and Distributed Learning page at http://www.bookstore.csus.edu/bookstore/distance/ for ordering information.