Course Description
In this course we explore the role of government in modern market economies. We begin by identifying situations in which private markets fail to achieve efficient outcomes on their own. We evaluate the common market failures of public goods and externalities, examining how government policies can help these markets achieve efficient allocations. We also examine theories of social choice and the economic effects of social security, government health care programs, and other income redistribution programs. To provide concrete examples, our focus will be primarily on the United States. The tools we develop to analyze these programs will build on the basic utility maximization framework developed in your microeconomic theory courses.

In the second half of the course we turn our attention to the consequences of government revenue collections. We examine government tax policies, with particular attention to the effects on individual incentives and market outcomes. We discuss income taxation and the U.S. personal income tax system in particular. Contrasts will be drawn to other tax systems.

Our analysis will include both empirical and theoretical components. While the primary classroom format will be lectures, classroom discussions will occur regularly. Students are encouraged to come to class prepared to discuss assigned readings and homeworks and to find relevant articles on the internet or in the popular press to help solidify their understanding of course concepts.

Readings
The text for this course is Public Finance by Harvey Rosen and Paul Gayer (9th Ed.), published by McGraw-Hill Irwin.

Additional readings will be provided as the courses proceeds.

Prerequisites
Microeconomic Theory (Econ 201) and Math 126 or equivalent