1008338 - PUBLIC FINANCE

Knowledge and understanding: The course’s goal is to provide students with advanced knowledge and skills on the role of public finance and the effects of taxation in the modern market economies. The course will develop analytical knowledge of the main tools of the public sector’s financial activity, with particular regard to those of public accountancy and national budget, following the most recent theoretical developments.

Applying knowledge and understanding: The knowledge of the main tools of the public sector’s activity will enable students to use and interpret the main documents of public finance, while the development of analytical skills on the structure and the implications of the different tax models will allow them to deal with the problems related to economic-managerial decisions, thus taking into account the effects caused by taxation.

Making judgements: Students will be able to critically assess the different taxation choices of governments, in terms of their social welfare impact. 

Communication skills: Students will gain communication skills and appropriateness in the use of technical language, by means of interaction and active participation during class activities, so as to be able to convey technically rigorous information to experts and non-experts.

Learning skills: The learning skills of students will be improved through an appropriate interaction, in particular during classes devoted to practice the theoretical concepts through analytical exercises. 

The course is structured through lectures, carried out with the support of slides and additional educational material that is made available to students through the Studium platform. To consolidate the understanding of the topics covered and the analytical skills of the students at the end of the discussion of the individual topics in the program, there will be classroom exercises carried out by the teacher.

No prerequisites. Although not mandatory, however, a good knowledge of microeconomics tools at intermediate level is strongly recommended. Furthermore some knowledge of intermediate calculus and statistics is endorsed.

Usually mandatory. 

Introductory topics:

- Market failures and government intervention. 

- Concepts and models for the analysis of the role of public finance. 

- Concepts, classifications, and statistics of taxation. 

General issues of the economic analysis of the effects of taxation: tax incidence, tax burden, and tax neutrality. 

Taxation and economic choices

- Taxes and labor supply choices

- Taxes and savings choices

- Taxes and investment choices

- Taxers and corporate choices

Optimal taxation

Tax evasion

1. J. Gruber. Public Finance and Public Policy. 7th ed. Macmillan Learning, 2022. (Chapters 1, 2, 3, 18, 19, 20, 21, 22, 23, 24).

2. J. Hindriks and G.D. Myles. Intermediate public economics. 2nd ed. Cambridge: MIT press, 2013. (Chapters 15 – excluding paragraphs 15.8 and 15.9; 16 – excluding paragraphs 16.6.2, 16.7, 16.8; 17 – excluding paragraph 17.8).

Evaluation is carried out by means of a written test and an oral exam. The written test consists of three exercises, which require students to apply the concepts and the models developed for the different topics of the course. It needs to be completed within 90 minutes. The oral exam will follow the marking of the written tests, and it is aimed at testing the knowledge of the concepts and models developed for the different topics of the course. Students are admitted to the oral exam if their score for the written test is equal or higher than 18/30. 

It is strongly suggested to review the self-assessment questions and tests reported at the end of each chapter of Texts 1 and 2. Some examples of examinations delivered in past years are also available on Studium website.