Syllabus

Economics 8080                                                                                 Professor: Ben Scafidi
Economics of the Public Sector                                                         Office: 1202D Urban Life
Fall 1999                                                                                             Phone: (404) 651-2977
T/T 5:30-6:45pm, 796 Education Bldg.                                             Office Hrs: TU 4-5:30pm, W 3-4:30pm
                                                                                                                and by appointment
                                                                                                            Email: bscafidi@gsu.edu

Course Description: An economic analysis of the role of government. The rationales for various levels of governments to provide public goods, mitigate externalities, regulate monopolies, and redistribute income will be explored from an economic perspective. The course will then consider tools to analyze the effects of government expenditure programs and taxes. The course will conclude with economic analyses of fiscal federalism and social choice.

Prerequisite: Principles of Microeconomics

Course Materials:

Rosen, Public Finance, 5th edition, Irwin

Browning and Zupan, Microeconomic Theory and Applications,

5th Edition, Harper Collins (Optional) Course Enrollment and Withdrawals: All university regulations apply.

Course Requirements:

                                                                    Dates

                    HW (extra credit)  5%             Sept. 23 and Dec. 7

Midterm Exam     30%            Oct. 5

Memoranda        20%             Oct. 14 and Nov. 4

Paper                 20%              Dec. 2

Final Exam        30%               Dec 14, 7:15pm - 9:15pm

 The two memoranda will be written to your boss—a legislator or a public administrator. They will concisely and clearly cover your thinking on an important public policy issue. Each memorandum should contain a description and economic analysis of the issue and alternative courses of action. The conclusion will be a firm recommendation that contains positive and normative justifications. You should use the theory learned in class and any outside materials to support your position. Each memo will be no more than three pages, single-spaced. The paper (10-15 pages) will be an in depth analysis of the topic used for your first paper. One class meeting during the semester will have the instructor questioning each student about the recommendation in his or her memorandum.

No absences from the exams or late papers will be tolerated without prior permission of the instructor.

The topics for the memoranda include:

1) The merits of the 1996 U.S. welfare reform law
2)  Building public housing
3)  Financing schooling through vouchers
4)  Centralized versus decentralized provision of any public good or service
5)  Tolls on highways
6)  Privatization of any publicly provided good or service
7)  Allowing private entities to provide public goods or services via contracting
8)  Competitive sourcing
9)  Flat income taxation
10) Consumption versus income taxation
11)  Property versus sales taxation as a means for state and local revenue generation
12)  Price regulation of prescription drugs (or price regulation in any similar market)
13)  Markets for pollution
14)  Impact fees

You must notify the instructor of your first memorandum topic by September 30. If you want to choose another topic you must get prior approval from the instructor.

Course Outline:

            I  The Role of Government in the Economy

    Rosen Chapters 1 and 2

    II  Review of Demand Theory, Utility Maximization, and Competition

    B&Z Chapters 1-7 and pages 507-527 in Rosen

    III  When Markets Work

    Rosen Chapter 4

    IV  When Markets Fail: Public Goods, Externalities, and Monopoly

    Rosen Chapters 5 and 6, B&Z Chapters 12-14
    "When Can Public Policy Makers Rely on Private Markets? The Effective Provision of Social Services" by Rebecca Blank, NBER Working Paper # 7099, April 1999
    Privatization: The Key to Better Government by E.S. Savas, Chapters 8 and 9

    Midterm Exam October 5

    V  Expenditure Policy: Cost-Benefit Analysis and Income Redistribution

    Rosen Chapters 8-11
    "The Economics of Vouchers" by David Bradford and Daniel Shaviro, NBER Working Paper # 7092, April 1999
    "Rewards for High Student Achievement and Interventions for Persistently Low Student Achievement" by Ben Scafidi

    VI  Tax Policy

    Rosen Chapters 13-15
    "The Net Fiscal Incidence of the Georgia Lottery for Education" by Ross Rubenstein and Ben Scafidi

    VII  Fiscal Federalism

    Rosen Chapter 21

    VIII  Political Economy

    Rosen Chapter 7

Final Exam December 14, 7:15 - 9:15pm