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14.41 | Fall 2010 | Undergraduate

# Public Finance and Public Policy

### Course Meeting Times

Lectures: 2 sessions / week, 1.5 hours / session

Recitations: 1 session / week, 1 hour / session

### Course Description

Explores the role of government in the economy, applying tools of basic microeconomics to answer important policy questions such as government response to global warming, school choice by K-12 students, Social Security versus private retirement savings accounts, government versus private health insurance, setting income tax rates for individuals and corporations.

### Prerequisites

14.01 Principles of Microeconomics

### Requirements and Grading

There are three sets of requirements for this course:

ACTIVITIES | PERCENTAGES
--- | ---
Midterm exam | 25%
Final exam | 50%
Problem sets | 25%

#### Readings

The only required reading is my textbook:

Gruber, Jonathan. Public Finance and Public Policy. 3rd ed. Worth Publishers, 2009. ISBN: 9781429219495.

#### Exams

There will be a midterm exam worth 25% of the grade, and a final worth 50%. The midterm will be in class, 85 minutes, and closed book/closed notes.

#### Problem Sets

There will be 5 problem sets throughout the semester, each of which will consist of both mathematical exercises and essay questions. This requirement will be worth the remaining 25% of the grade. No late problem sets will be accepted for any reason. Grading will be based on the top 4/5 grades (your lowest homework grade will be dropped).

### Calendar

LEC # | TOPICS | KEY DATES
--- | --- | ---
1 | Why study public finance? |
2 | Externalities in theory and practice |
Public goods in theory and practice
3 | Basic theory, optimality and pricing | Homework 1 due
4 | Cost/benefit analysis |
5 | Political economy |
6 | Local public goods and fiscal federalism | Homework 2 due
7 | Public provision of private goods: education |
| Midterm exam |
Social insurance and redistribution
8 | Overview |
9 | Social security |
10 | Unemployment insurance, disability insurance and workers’ compensation |
11 | Health insurance | Homework 3 due
12 | Redistribution and welfare policy |
13 | The institutions and theory of taxation |
Taxation and individual behavior
14 | Taxation and labor supply | Homework 4 due
15 | Taxation and savings |
16 | Taxation, risk taking and wealth |
17 | Corporate taxation | Homework 5 due
18 | Tax reform |
| Final exam |

## Course Info

##### Instructor

- Prof. Jonathan Gruber

##### Departments

- Economics

##### As Taught In

Fall 2010

##### Level

Undergraduate

##### Topics

- Social Science
  - Economics
    - Microeconomics
    - Political Economy
  - Public Administration
    - Public Policy
    - Social Welfare

##### Learning Resource Types

grading Exams with Solutions
assignment Problem Sets
Problem Set Solutions

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