Public Finance (FIN104, EP)

Course description

This course is a one-semester introduction to Public Finance. Public Finance is a branch of economics that focuses on the role of government in the economy and the industry of financial services. In this course, we will study the role and the size of the public sector, including the rationale for its existence (public goods, market failures), as well as government interventions in the economy (taxation policy, income redistribution) and the banking sector, with a particular emphasis on the sovereign debt crisis in Europe. The recent EU Referendum, in which the United Kingdom voted to leave the European Union, will also be discussed from the perspective of Public Finance as a case study.

Public Finance is also interconnected with Microeconomics and Macroeconomics. From the former Public Finance borrows many analytical tools and concepts including rational behavior, utility maximization, and market equilibrium. Based on the latter, fiscal policy is formulated to influence the level of aggregate demand in the economy. To comprehend the role of fiscal policy, a macroeconomic policy game will be played.

Aims of the course

This course aims to introduce to students the main concepts of Public finance: the role of the state in the economy, public goods and market failures, policy of taxation and income redistribution. Attention is also given to fiscal policy issues.

Learning outcomes

  • Analyze the concepts of public goods and market failures and their cures
  • Apply various socio-economic models to the evaluation of the public policy questions
  • Discuss the reasons for government intervention in the economy as well as different types of regulation
  • Evaluate and compare different policies of taxation and income redistribution
  • Analyze the issues in managing the  fiscal policy
  • Learn the mechanics of sovereign and municipal bond markets.