prof. Valery Makarov

Aims: To familiarise students with basic notions, models and results of Public Economics. The course helps audience to give thought to the role of the state in economy, to the economic sectors, which needed in a state intervention and on the contrary, to which this intervention can do more harm than good.

Grade system: Total grade is consisting of weighted average from midterm exam (0.3), final exam (0.6) and one home assignment (0.1). Duration of the midterm exam is 1.5 hours and final exam is 3 hours. Home assignment includes conspectus of a lecture.

Program.

1. Introduction: the role of a state in public life, market failures, the role of public goods in economy. Classification of goods. Efficient level of public good providing. Samuelson ratio.
2. General equilibrium model with public sector, Arrow-Debreu economy. Lindahl market equilibrium. Core of economy. Equilibrium and core. Kaneko example.
3. Contemporary theory of institutions. Jurisdictions and clubs, difference between them. Club goods. Example of equilibrium allocation of agents by clubs. Tiebout hypothesis, “voting by feet”. Example of nonexistent equilibrium. Examples of institution origination.
4. Double-layer economy. Tobin effect. Arrou-Debreu economy with rationing mechanism. Example of equilibrium determination.
5. Monopolies control. Niskanen model of bureaucracy. Rozentah-Romer model of bureaucracy.
6. State intervention. Price and output regulation of essential commodities. Boiteux model.
7. Pareto efficient and optimal taxation. Principles of equivalence and ability to pay. Stiglitz model. Example of a taxation scheme. Example of Pareto efficient taxation scheme.

Literature:

Basic reading:

Atkinson A. B. and J. A. Stiglitz, Lectures on public economics, McGraw-Hill International Editions Economics Series, 1980

Yakobson L. I., Public economics: economic theory and policy, Higher School of Economics, Moscow, 2000 (in russian).

Cullis John and Jones Philip, Public Finance and Public Choice, Second Edition, Oxford University Press , 1998.

Musgrave, R. A. and Musgrave, P. B., Public Finance in Theory and Practice. Fifth Edition. New York, McGraw-Hill, 1989.

Rosen S. Harvey. Public Finance, Fourth edition, IRWIN, 1995.

Additional reading:

Bewley, T. F., A Critique of Tiebout's Theory of Local Public Expenditures, Econometrica, Vol. 49, No. 3, May 1981.

Buchanan, J. M., An Economic Theory of Clubs. Economica, 32, 125, pp.1 - 14, 1965.

Handbook of Public Economics, Edited by Auerbach A. J. and Feldstein M. v.1, v.2. Elsevier, North Holland, 1985.

Samuelson, P. A., The Pure Theory of Public Expenditure. Review of Economics and Statistics, 37, 4, 1954.

Tiebout, A. Theory of Local Public Expenditures,1956.

Tobin, J., "On limiting the domain of inequality" Journal of Law and Economics, 263-277, 1970.

Contract Theory

Corruption

Development Economics*

Econometrics-1

Econometrics-2

Econometrics-3

Econometrics-4 (obligotary)

Economic Statistics

Economics of Transition
(elective)

Elements of the Economics
of Transition*

English

Financial Economics

Game Theory

Growth Theory*

Health Economics*

History of Economic
Thought (obligotary)

International Finance*

Industrial Organization-1*

Industrial Organization-2*

Institutions

International Trade*

Labor Economics*

Macroeconomics-1

Macroeconomics-2

Macroeconomics-3

Macroeconomics-4

Macroeconomics-5

Macroeconomics-6 (obligotary)

Mathematical Statistics

Mathematics for Economists

Microeconomics-1

Microeconomics-2

Microeconomics-3

Microeconomics-4

Microeconomics-5

Microeconomics-6
(obligotary)

Natural Resources

Non-Cooperative Games

Open Macroeconomics*

Political Economy

Probability Theory

Public Economics-1*

Public Economics-2*

Public Finance*

Research Seminar

Russia in global environment:
past and present (rus)