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University of Nevada, Reno
Department of Economics
ECON 751.001 – Public Economics
(Tuesday & Thursday 5:30 – 6:45 pm, AB 213)
Fall 2011
Mehmet S. Tosun
Office: AB319F
Phone: 775-784-6678
Email: tosun@unr.edu
Homepage: http://www.business.unr.edu/faculty/tosun/
Office Hours: W 3:00 – 4:30 pm
or by appointment.
Course Description: This is a graduate level course on public finance. The goal is to
introduce students to public finance and provide them with the theory and some
empirical evidence on the expenditure and taxation functions of the government.
The course is primarily geared to Master’s and Ph.D. students.
Course Objectives: Specific objectives are:
1. Examine the rationale behind government’s involvement in the economy.
2. Provide the student with the methodology used in the evaluation of government
activities.
3. Analyze the efficiency and equity aspects of major taxation forms and tax reform.
4. Inform the student about the structure and character of public finance in the U.S.
and elsewhere.
5. Acquaint students with some of the empirical research related to taxation and
government expenditure.
Students with Disability: If you have a disability and will be requiring assistance, please
contact me or the Disability Resource Center (Thompson Building Suite 101) as
soon as possible to arrange for appropriate accommodations.
Reading Assignments: The reading list below is rather extensive. The readings with
an asterisk “*” are required and will be covered entirely or partially in class.
Recommended Textbook:
Tresch, Richard. 2002. Public Finance: A Normative Theory, Second Edition.
San Diego, CA: Academic Press.
Background Texts: These are undergraduate level references for background reading
for an overview of public finance principles and tax systems.
Auerbach, A.J. 2000. Public Finance: Worth Series in Outstanding
Contributions. New York, NY: Worth Publishers
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Browning, E.K. and J.M Browning. 1994. Public Finance and the Price System,
Fourth Edition, Upper Saddle River, New Jersey: Prentice Hall.
Bruce, N. 2001. Public Finance and the American Economy, Second Edition.
New York, NY: Addison, Wesley.
Cordes, J.J., R.D. Ebel and J.G. Gravelle. 2005. The Encyclopedia of Taxation
and Tax Policy, Second Edition. Washington, D.C.: The Urban Institute Press.
Graetz, M. J. 1999. The U.S. Income Tax, New York: Norton.
Gruber, Jonathan. 2010. Public Finance and Public Policy, Third Edition. New
York, NY: Worth Publishers. (“Gruber”).
Hyman, D. N. 2008. Public Finance: A Contemporary Application of Theory to
Policy (9th Edition). Mason, OH: Thomson South-Western.
Musgrave, Richard A. 1959. The Theory of Public Finance: A Study in Public
Economy, New York: McGraw-Hill.
Quigley, J.M. and E. Smolensky. 1994. Modern Public Finance, Cambridge:
Harvard University Press.
Rosen, H. S. and Ted Gayer. 2010. Public Finance (9th Edition). Boston: Irwin
McGraw-Hill.
Slemrod, J., and J. Bakija. 2008. Taxing Ourselves: A Citizen’s Guide to the
Debate Over Taxes, Fourth Edition, Cambridge: MIT Press.
Stiglitz, J.E. 2000. Economics of the Public Sector, Third Edition, New York,
NY: W.W. Norton & Company.
Steuerle, Eugene. 2004. Contemporary U.S. Tax Policy, Washington, D.C.: The
Urban Institute Press.
Tanzi, Vito and Howell Zee. 2001. Tax Policy for Developing Countries,
Washington, D.C.: International Monetary Fund.
Tresch, Richard. 2008. Public Sector Economics. New York, NY: Palgrave
MacMillan. Student companion web site can be accessed at
http://www.palgrave.com/economics/tresch/students/index.html
Reference Texts: These are graduate textbooks on public economics.
Atkinson, A.B. and J.E. Stiglitz. 1980. Lectures on Public Economics, New
York: McGraw-Hill.
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Auerbach, Alan J. and Martin S. Feldstein. 2002. Handbook of Public
Economics, Volume 3 and 4, Amsterdam: North Holland.
Auerbach, Alan J. and Martin S. Feldstein. 1985. Handbook of Public
Economics, Volume 1 and 2, Amsterdam: North Holland.
Cornes, Richard and Todd Sandler. 1996. The Theory of Externalities, Public
Goods and Club Goods. Second Edition. New York: Cambridge University Press.
Cullis, J. and P. Jones. 1998. Public Finance and Public Choice. Second
Edition. New York: Oxford University Press.
Groves, Harold M. 1974. Tax Philosophers: Two Hundred Years of Thought in
Great Britain and the United States. Madison WI: The University of Wisconsin
Press.
Jha, Raghbendra. 1998. Modern Public Economics, New York: Routledge.
Musgrave, Richard A. and Alan T. Peacock. 1967. Classics in the Theory of
Public Finance. New York, NY: St Martin’s Press.
Myles, Gareth D. 1995. Public Economics, Cambridge, MA: Cambridge
University Press.
Salanie, Bernard. 2003. The Economics of Taxation. Cambridge, MA: Cambridge
University Press.
Grading: The course grade is based on two problem sets (5% each), policy exercise
(10%), a midterm exam (25%), a comprehensive final exam (30%), and a research
paper (25%). Final exam is currently scheduled on Monday, December 19, 2011,
5:00 – 7:00 pm. Attendance to all class sessions is mandatory. This course uses a
+/- scale for grading.
Late Assignments: Students are expected to complete the problem sets, policy exercise
and the research paper by the due dates indicated below. Failure to do so will
result in zero credit for that assignment. Instructor should be notified of any
problems regarding the completion of the assignments prior to the deadlines.
Research Paper: The objective here is to provide students with a compact research
experience. Students are expected to turn this into a publishable paper. The
writing of the paper will include the following four steps:
Brainstorming: Come up with three research ideas that interest you the most.
You can discuss these with me during my office hours. You will then
choose one of these ideas as a research project for this semester.
Referee Report: Find a working paper (not a paper published in a journal) that is
closely related to your research idea and write a referee report on it (see
below for more information on the referee report). There should be a
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section where you discuss what you would have done differently if you
had written that paper.
Proposal and Outline: Use the working paper from the previous step and your
referee report as the starting point and write a one-page research proposal
together with a detailed research outline that includes a preliminary list of
references.
Presentation: Present a draft of the paper to the class for comments. The draft
should be distributed in class one week before the presentation.
Referee Report: One interesting aspect of academic life is reading as well as writing
referee reports for articles submitted to journals. Graduate students can greatly
benefit from this exercise. Instructional material on how to write a referee report
will be provided.
Policy Exercise: In this assignment you will analyze a fictitious policy case using the
theories you have learned in this class. This exercise will be assigned towards the
end of the term.
Special Class Sessions: Time permitting, I plan to arrange special session(s) on topics
that will be determined later. Guest speakers and special class sessions will be
announced later in class.
Internet Information: Some of the papers in the reading list have hyperlinks to
electronic copies through JSTOR, NBER and IZA databases and other publicly
available journals such as National Tax Journal. On your electronic copy of the
syllabus, you can click on links to have access to these papers in pdf.
Academic Integrity: Honesty and personal integrity are key facets of the University of
Nevada community. The issue of academic integrity is taken very seriously at the
University and College of Business Administration. Since the majority of students
take pride in total academic integrity, it is hoped that you, as a student, will take
action to influence the practice of integrity in academic community. I understand
that students feel pressure to perform well in their classes, and I will do
everything that I can to ensure that you have the resources necessary to succeed.
However, cheating on exams and course assignments will not be tolerated, and
students who fail to comply with the University’s honor code
(www.unr.edu/stsv/acdispol.html, www.unr.edu/stsv/nsop/dishones.htm) will be
subject to the maximum university penalties. Please visit the university website if
you are unfamiliar with the actions which constitute academic dishonesty.
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Outline of Topics and Readings:
1. Introduction and Review of Welfare Economics
Background: Tresch (2008), Chapters 1-3; Tresch (2002), Chapter 1, or from your
favorite micro textbook. Also check the web site http://www.thenewpublicfinance.org/
for supporting materials on the New Public Finance.
*Buchanan, James M. and Richard A. Musgrave. 1999. Public Finance and Public
Choice: Two Contrasting Visions of the State, Cambridge, MA: MIT Press. Chapter 12.1.
Buchanan, James M. 1987. “The Constitution of Economic Policy,” American
Economic Review, 77 (3): 243-250. http://www.jstor.org
*Kaul, Inge and Pedro Conceicao. 2006. “Overview: Why Revisit Public Finance
Today?” in The New Public Finance, Responding to Global Challenges. New York, NY:
Oxford University Press: 1-27.
Musgrave, Richard A. and Peggy B. Musgrave. 1980. Public Finance in Theory and
Practice, New York: McGraw-Hill. Chapter 1.
*Poterba, James M. 1998. “Public Finance and Public Choice,” National Tax Journal,
51 (2): 391-396. http://ntj.tax.org
2. Public Goods
Background: Tresch (2008) Chapters 4,5 and 8
Also check the web site http://www.globalpublicgoods.org/ for background papers and
supporting materials on global public goods.
Lindahl, E. 1958. “Just Taxation – A Positive Solution,” in Musgrave and Peacock, eds.,
Classics in the Theory of Public Finance, Macmillan, pp. 168-176.
Musgrave, Richard A. 1939. “The Voluntary Exchange Theory of Public Economy,”
Quarterly Journal of Economics, 53 (2): 213-237. http://www.jstor.org
*Oakland, W. 1987. “Theory of Public Goods.” Chapter 9, Handbook of Public
Economics, Vol. 2, pp. 485-535.
*Samuelson, P.A. 1954. “The Pure Theory of Public Expenditure,” Review of
Economics and Statistics, 36 (4): 387-389. http://www.jstor.org
*Samuelson, P.A. 1955. “Diagrammatic Exposition of a Theory of Public Expenditure,”
Review of Economics and Statistics, 37 (4): 350-356. http://www.jstor.org
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Sandmo, Agnar. 2003. “International Aspects of Public Goods Provision,” in Providing
Global Public Goods, I.Kaul, P. Conceicao, K.Le Goulven and R.U.Mendoza eds. New
York, NY: Oxford University Press: 112-130.
3. Externalities
Background: Tresch (2008), Chapters 6 and 7; Tresch (2002), Chapter 5
Bovenberg, A. Lans and Lawrence H. Goulder. 2001. “Environmental Taxation and
Regulation,” NBER Working Paper No. 8458. http://papers.nber.org/papers/W8458
Also in Handbook of Public Economics, Volume 3, Amsterdam: North Holland.
*Coase, R. 1960. “The Problem of Social Cost,” Journal of Law and Economics, pp.144.
Ebrill, L. and S. Slutsky. 1982. “Time, Congestion, and Public Goods,” Journal of
Public Economics, 17 (3): 307-334.
*Farrell, Joseph. 1987. “Information and the Coase Theorem,” Journal of Economic
Perspectives, 1 (2): 113-129. http://www.jstor.org
Fullerton, D. and A. Wolverton. 2005. “The Two-Part Instrument in a Second-Best
World” Journal of Public Economics 89: 1961-1975.
*Fullerton, D. and A. Wolverton. 1999. “The Case for a Two-part Instrument:
Presumptive Tax and Performance Subsidy” in Environmental and Public Economics:
Essays in Honor of Wallace E. Oates, A. Panagaria, P. Portney and R. Schwab, eds.,
Cheltenham, UK: Edward Elgar: 32-57. Available as NBER paper 5993.
Fullerton, D. and S. West. 2000. “Tax and Subsidy Combinations for the Control of Car
Pollution,” NBER Working Paper W7774. http://papers.nber.org/papers/W7774.
*Hardin, Garren. 1968. “The Tragedy of the Commons,” Science, December.
Maskin, Eric S. 1994. “The Invisible Hand and Externalities,” American Economic
Review, 84 (2): 333-337.
Rosenkranz, S. and P. Schmitz. 2004. “Can Coasian Bargaining Justify Pigouvian
Taxation?” CEPR Working Paper 4263.
*Wiggins, S. and G. Libecap. 1985. “Oil Field Unitization: Contractual Failure in the
Presence of Imperfect Information,” American Economic Review, 75 (3): 368-385.
http://www.jstor.org
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4. An Introduction to Taxation
Check the Tax Analysts’ web site:
http://www.taxanalysts.com/www/freefiles.nsf/Files/Yablon.pdf/$file/Yablon.pdf for a
recent collection of tax quotes.
4.1. Excess Burden
Background: Tresch (2008), Chapter 15
Auerbach, Alan J. and James R. Hines. 2001. “Taxation and Economic Efficiency,”
NBER Working Paper No. 8181. http://papers.nber.org/papers/w8181.pdf
Also in Handbook of Public Economics, Volume 3, Amsterdam: North Holland.
Goulder, Lawrence H. and Roberton C. Williams III. 1999. “The Usual Excess
Burden Approximation Usually Doesn’t Come Close,” NBER Working Paper No.
7034. http://papers.nber.org/papers/w7034.pdf
Harberger, Arnold C. “Three Basic Postulates for Applied Welfare Economics: An
Interpretive Essay,” Journal of Economic Literature 9:3 (1971), 785-797.
http://jstor.org
*Hausman, J.A. 1981. “Exact Consumer’s Surplus and Deadweight Loss,” American
Economic Review, 71 (4): 662-676. http://www.jstor.org
Hines, Jr., J.R. 1999. “Three Sides of Harberger Triangles,” Journal of Economic
Perspectives, 13 (2): 167-188.
Tresch (2002), Chapter 13, 401-429.
Rosen, Harvey S., “The Measurement of Excess Burden with Explicit Utility
Functions,” Journal of Political Economy 86:2 (1978), S121-S135. http://jstor.org
Goulder, L.H. and R.C. Williams. 2003. “The Substantial Bias From Ignoring
General Equilibrium Effects in Estimating Excess Burden, and a Practical Solution,”
Journal of Political Economy, 111 (4): 898-927.
*Willig, Robert, “Consumer’s Surplus Without Apology,” American Economic
Review 66:4 (1976): 589-597. http://jstor.org
*Browning, E.K. 1987. “On the Marginal Welfare Cost of Taxation,” American
Economic Review, 77 (1): 11-23. http://www.jstor.org
*Browning, E.K. 1976. “The Marginal Cost of Public Funds,” Journal of Political
Economy, 84 (2): 283-298. http://www.jstor.org
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Fullerton, D. 1991. “Reconciling Recent Estimates of the Marginal Welfare Cost of
Taxation,” American Economic Review, 81 (1): 302-307.
Kleven, H.J. and C.T. Kreiner. 2003. “The Marginal Cost of Public Funds in OECD
Countries: Hours of Work vs. Labor Force Participation,” CESifo Working Paper No.
935.
Stuart, C. 1984. “Welfare Costs per Dollar of Additional Tax Revenue in the United
States,” American Economic Review 74 (3): 352-362. http://jstor.org
5. Optimal Taxation
Background: Tresch (2008), Chapter 16
Atkinson, A. and N. Stern. “Pigou, Taxation, and Public Goods,” Review of
Economic Studies, 41 (1): 119-128. http://www.jstor.org
Diamond, P. and J. Mirrlees. 1971. “Optimal Taxation and Public Production I:
Production Efficiency,” American Economic Review, 61 (1): 8-27. http://www.jstor.org
Diamond, P. and J. Mirrlees. 1971. “Optimal Taxation and Public Production II:
Tax Rules,” American Economic Review, 61 (3): 261-278. http://www.jstor.org
*Diamond, P. 1975. “A Many-Person Ramsey Tax Rule,” Journal of Public
Economics, 4: 335-342.
Giertz, Seth. 2004. “Recent Literature on Taxable Income Elasticities,” CBO Technical
Paper 16 (December). Washington D.C.: Congressional Budget Office.
*Mankiw, Gregory, M. Weinzierl and D. Yagan. 2009. “Optimal Taxation in Theory and
Practice,” NBER Working Paper No. 15071. http://www.nber.org/papers/w15071.
Ramsey, Frank P. 1927. “A Contribution to the Theory of Taxation,” Economic Journal,
March. http://www.jstor.org
Sandmo, A. 1975. “Optimal Taxation in the Presence of Externalities,” Swedish
Journal of Economics, pp.86-98.
*Slemrod, J. 1990. “Optimal Taxation and Optimal Tax Systems,” Journal of
Economic Perspectives, 4 (1): 157-178. http://www.jstor.org
*Smith, P. 1991. “Lessons from the British Poll Tax Disaster,” National Tax Journal, 44
(4): 421-436.
Stern, Nicholas H. 1976. “On the Specification of Models of Optimum Income
Taxation,” Journal of Public Economics 6 (1): 123-162.
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Stern, Nicholas. 1987. “The Theory of Optimal Commodity and Income Taxation:
An Introduction,” in D. Newbery and N. Stern, eds., The Theory of Taxation in
Developing Countries, Oxford: Oxford University Press: pp.22-59.
Tresch (2002), Chapter 13, 429-444; Chapter 14, 461-482.
6. Tax Incidence
Background: Tresch (2008), Chapters 18 and 19
Atkinson, A.B. 1994. “The Distribution of the Tax Burden,” in J.M. Quigley and E.
Smolensky, eds., Modern Public Finance, Cambridge: Harvard University Press: pp. 1349.
Congressional Budget Office. 1996. The Incidence of the Corporate Income Tax,
Washington, D.C.
Slemrod, J. and J. Bakija. 2008. Taxing Ourselves: A Citizen’s Guide to the Great
Debate Over Taxes, Fourth Edition, Cambridge: MIT Press, Chapter 3.
6.1. Partial Equilibrium
Fullerton, D. and G.E. Metcalf. 2002. “Tax Incidence,” NBER working paper 8829.
Goolsbee, A. 2000. “In a World Without Borders: The Impact of Taxes on Internet
Commerce,” Quarterly Journal of Economics, 115 (2): 561-576.
Kotlikoff, L. and L.H. Summers. 1987. “Tax Incidence,” in A. Auerbach and M.
Feldstein, eds., Handbook of Public Economics, Volume 2, Amsterdam: North
Holland: pp.1043-1092.
6.2. General Equilibrium
Diamond, P. 1978. “Tax Incidence in a Two-Good Model,” Journal of Public
Economics, 9: 283-299.
Fullerton, D. and G.E. Metcalf. 2002. “Tax Incidence,” NBER working paper 8829.
*Harberger, A.C. 1962. “The Incidence of the Corporation Income Tax,” Journal of
Political Economy, 70 (3): 215-240. http://www.jstor.org
Mclure, C. 1975. “General Equilibrium Incidence Analysis,” Journal of Public
Economics, February.
Tresch (2002), Chapter 16, 549-571.
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6.3. Lifecycle and Intergenerational Tax Incidence
Auerbach, A.J., J. Gokhale, and L.J. Kotlikoff. 1994. “Generational Accounting: A
Meaningful Way to Evaluate Fiscal Policy,” Journal of Economic Perspectives, 8 (1):
73-94.
Barthold, Thomas A. 1993. “How Should We Measure Distribution,” National Tax
Journal 46 (3): 291-299.
Fullerton, D. and D.L. Rogers. 1993. Who Bears the Lifetime Tax Burden?,
Washington: Brookings Institution. Chapter 1.
*Fullerton, D. and D.L. Rogers. 1991. “Lifetime Versus Annual Perspective on Tax
Incidence,” National Tax Journal, 44(3): 277-287.
Metcalf, Gilbert E. 1993. “The Lifetime Incidence of State and Local Taxes:
Measuring Changes During the 1980s,” NBER Working Paper No. 4252.
http://papers.nber.org/papers/w4252.pdf
*Pechman, J.A. 1986. Who Paid the Taxes, 1966-1985, Washington: Brookings
Institution. Chapter 3 and 4.
*Poterba, James M. 1989. “Reexaminations of Tax Incidence,” American Economic
Review, 79 (2): 325-330. http://www.jstor.org
Tresch (2002), Chapter 17, 606-621.
6.4. Applied Incidence Studies
Ebel, Robert D. 1990. A Fiscal Agenda for Nevada. Reno, NV: University of Nevada
Press.
Feldstein, M. 1988. “Imputing Corporate Tax Liabilities to Individual Taxpayers,”
National Tax Journal, 41 (1): 37-59.
Gade, M., and L. Adkins, 1990. “Tax Exporting and State Revenue Tax Structures”,
National Tax Journal 43: 39-42.
Joint Committee on Taxation. 1993. Methodology and Issues in Measuring Changes
in the Distribution of Tax Burdens, June 14, Washington: U.S. Government Printing
Office.
McLure, C.E., 1967. “The Interstate Exporting of State and Local Taxes: Estimates
for 1962”, National Tax Journal, 20 (1): 49-77.
Musgrave, R.A. and D. Daicoff. 1958. “Who Pays the Michigan Taxes?” Michigan
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Tax Study Staff Papers, Lansing: Secretary of Finance, 131-183.
Musgrave, R.A., J.J. Carroll, L.D. Cook and L.Frane. 1951. “Distribution of
Payments by Income Groups: A Case Study for 1948,” National Tax Journal, 4 (1):
1-53.
Pechman, J.A. and B.A. Okner. 1971. Who Bears the Tax Burden?, Washington:
Brookings Institution.
Pechman, J.A. 1986. Who Paid the Taxes, 1966-1985, Washington: Brookings
Institution.
Phares, D., 1980. Who Pays State and Local Taxes?, Cambridge, Massachusetts:
Oelgeschlager, Gunn and Hain, Publishers, Inc. Chapter 4.
Pollock, S.H., 1991. “Mechanisms for Exporting the State Sales Tax Burden in the
Absence of Federal Deductibility” National Tax Journal 44: 297-310.
Tresch (2002), Chapter 17.
Yakovlev, Pavel, Mehmet S. Tosun and Arzu Sen. 2007. “The Economic Incidence of
West Virginia Taxes.” WV Public Finance Program Special Report.
6.5. Open Economy Tax Incidence
Eijfinger, Sylvester C.W. and Wolf Wagner. 2001. “Taxation if Capital is not
Perfectly Mobile: Tax Competition Versus Tax Exportation,” Center for Economic
Policy Research Discussion Paper No. 3084. www.cepr.org
Gravelle, Jane G. and Smetters, Kent A. (2006) "Does the Open Economy
Assumption Really Mean That Labor Bears the Burden of a Capital Income Tax?,"
Advances in Economic Analysis & Policy: Vol. 6 : Iss. 1, Article 3.
Available at: http://www.bepress.com/bejeap/advances/vol6/iss1/art3
Razin, A. and E. Sadka. 2004. “Capital Income Taxation in the Globalized World,”
NBER Working Paper 10630.
7. Taxation and Labor Supply
Background: Gruber, Chapter 21
Duncan, Denvil and Klara Sabirianova Peter. 2009. “Does Labor Supply Respond to a
Flat Tax? Evidence from the Russian Tax Reform,” IZA Disucssion Paper No. 4257.
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*Eissa, Nada. 1995. “Taxation and Labor Supply of Married Women: The Tax Reform
Act of 1986 as a Natural Experiment,” NBER Working Paper No. 5023.
http://papers.nber.org/papers/W5023
*Eissa, Nada. 1996. “Labor Supply and the Economic Recovery Tax Act of 1981,” in
Empirical Foundations of Household Taxation, M. Feldstein and J. Poterba eds.,
Chicago: University of Chicago Press: 5-38.
Feldstein, M. 1995. “The Effect of Marginal Tax Rates on Taxable Income: A Panel
Study of the 1986 Tax Reform Act,” Journal of Political Economy, 103 (3): 551-572.
*Hausman, Jerry A. 1985. “Taxes and Labor Supply,” in Handbook of Public
Economics, Volume 1, Alan Auerbach and Martin Feldstein, eds., Amsterdam: North
Holland: 213-265.
Hausman, Jerry A. 1985. “The Econometrics of Non-Linear Budget Sets,”
Econometrica, 53 (6): 1255-1282. http://www.jstor.org
*Heckman, J.J. 1982. “Comment”, in Behavioral Simulations in Tax Policy Analysis,
Martin Feldstein ed., Chicago: University of Chicago Press: Chicago: 70-82.
Moffitt, R. 1990. “The Econometrics of Kinked Budget Constraints,” Journal of
Economic Perspectives, 4 (2): 119-139. http://www.jstor.org
Saez, Emmanuel, Joel Slemrod and Seth Giertz. 2009. “The Elasticity of Taxable Income
with Respect to Marginal Tax Rates: A Critical Review,” NBER Working Paper No.
15012. http://www.nber.org/papers/w15012
8. Taxation and Saving
Background: Gruber, Chapter 22
*Shapiro, Matthew D. and Joel Slemrod. 2009. “Did the 2008 Tax Rebates Stimulate
Spending?,” NBER Working Paper No. 14753. http://www.nber.org/papers/w14753
8.1. Household Saving
Auerbach, A.J. and J. Slemrod. 1997. “The Economic Effects of the Tax Reform Act
of 1986,” Journal of Economic Literature, 35 (June): 589-632.
Boskin, M. J. 1978. “Taxation, Saving and the Rate of Interest,” Journal of Political
Economy, 86 (2) part 2: S3-S27.
Bernheim, B.D. 2000. “Taxation and Saving,” NBER Working Paper No. 7061, and
forthcoming in Handbook of Public Economics, Volume 3, A.J. Auerbach and M.
Feldstein, eds., Amsterdam: Elsevier Science Publishers B.V.
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http://www.papers.nber.org/papers/W7061
*Feldstein, M. 1978. “The Welfare Cost of Capital Income Taxation,” Journal of
Political Economy 86 (April): S29-52.
*Summers, L.H. 1981. “Capital Taxation and Accumulation in a Life Cycle Model,”
American Economic Review, 71 (September): 533-544. http://www.jstor.org
8.2. Portfolio Composition
Feldstein, M. 1976. “Personal Taxation and Portfolio Composition: An Econometric
Analysis,” Econometrica, 44 (4): 631-650. http://www.jstor.org
*Poterba, J.M. 2001. “Taxation, Risk-Taking, and Household Portfolio Behavior,”
NBER Working Paper No. 8340. http://papers.nber.org/papers/W8340
Also in Handbook of Public Economics, Volume 3, Amsterdam: North Holland.
*Poterba, J.M. and A. Samwick. 2002. “Taxation and Household Portfolio
Composition: U.S. Evidence from the 1980s and 1990s,” Journal of Public
Economics, 87: 5-32. Also published as “Taxation and Household Portfolio
Composition: U.S. Evidence from the 1980s and 1990s,” 1999, NBER Working
Paper No. 7392. http://papers.nber.org/papers/W7392
8.3. Capital Gains
*Auten, G. and J. Cordes. 1991. “Cutting Capital Gains Taxes,” Journal of
Economic Perspectives, Winter, pp.181-192. http://www.jstor.org
*Burman, L.E. The Labyrinth of Capital Gains Tax Policy, Washington, D.C.:
Brookings. (read chapter 4)
http://brookings.nap.edu/books/0815712707/html/index.html
Burman, L.E. and William C. Randolph. 1994. “Measuring Permanent Responses to
Capital-Gains Tax Changes in Panel Data,” American Economic Review, 84 (4): 794809.
8.4 Social Security
Background: Tresch (2008), Chapter 12
Barro, R. 1974. “Are Government Bonds Net Wealth?,” Journal Political Economy,
82 (6): 1095-1117. http://www.jstor.org
*Feldstein, M. 1974. “Social Security, Induced Retirement and Aggregate Capital
Accumulation,” Journal of Political Economy, 82 (5): 905-926. http://www.jstor.org
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*Feldstein, M. 1982. “Social Security and Private Saving: Reply,” Journal of
Political Economy, 90 (3): 630-642. http://www.jstor.org
*Feldstein, M. 1996. “Social Security and Saving: New Time Series Evidence,”
National Tax Journal, 49 (2): 151-164.
International Monetary Fund. 2004. World Economic Outlook, September. The
analytic chapter on global aging (Chapter 3) can be downloaded from the IMF web
site www.imf.org.
Leimer, D.R. and S.D. Lesnoy. 1982. “Social Security and Private Saving: New
Time-Series Evidence,” Journal of Political Economy, 90 (3): 606-629.
Tosun, Mehmet S. 2009. “Global Aging and Fiscal Policy with International Labor
Mobility: A Political Economy Perspective,” IZA Discussion Paper No. 4166.
Tosun, Mehmet S. 2008. “Endogenous Fiscal Policy and Capital Market
Transmissions in the Presence of Demographic Shocks,” Journal of Economic
Dynamics and Control, 32: 2031-2060.
9. Taxation and Firm Behavior (will be covered if time permits)
Background: Gruber, Chapter 24
9.1. Taxation and Firm Investment
Auerbach, A. 1983. “Taxation, Corporate Financial Policy, and the Cost of Capital,”
Journal of Economic Literature, 21: 905-940. http://www.jstor.org
Cummins, J., K. Hassett and R.G. Hubbard. 1994. “A Reconsideration of Investment
Behavior Using Tax Reforms as Natural Experiments,” Brookings Papers on
Economic Activity, 2: 1-59.
*Hall, R.E. and D. Jorgenson. 1967. “Tax Policy and Investment Behavior,”
American Economic Review, 57 (3): 391-414. http://www.jstor.org
*Hassett, Kevin A. and R. Glenn Hubbard. 1998. “Tax Policy and Investment,”
NBER Working Paper No. 5683. http://papers.nber.org/papers/W5683
Also in Handbook of Public Economics, Volume 3, Amsterdam: North Holland.
Hayashi, F. 1982. “Tobin’s Marginal q and Average q: A Neoclassical
Interpretation,” Econometrica, 50 (1): 213-224. http://www.jstor.org
*Summers, L.H. 1981. “Taxation and Corporate Investment: A q Theory
Approach,” Brookings Papers on Economic Activity, 1: 67-127.
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9.2. Taxation and Firm Financial Policy
*Auerbach, Alan J. 2001. “Taxation and Corporate Financial Policy,” NBER
Working Paper No. 8203. http://papers.nber.org/papers/W8203
Also in Handbook of Public Economics, Volume 3, Amsterdam: North Holland.
*Gordon, R.H. and Y. Lee. 1999. “Do Taxes Affect Corporate Debt Policy?
Evidence from U.S. Corporate Tax Return Data,” NBER Working Paper No. 7433,
December. http://papers.nber.org/papers/W7433
Mackie-Mason, J. 1990. “Do Taxes Affect Corporate Financing Decisions,” Journal
of Finance, 45: 1471-1494. http://www.jstor.org
Miller, M. 1977. “Debt and Taxes,” Journal of Finance, 32: 261-275.
http://www.jstor.org
*Poterba, J.M. and L.H. Summers. 1985. “The Economic Effects of Dividend
Taxation,” in E. Altman and M. Subrahmanyam, eds., Recent Advances in
Corporation Finance, Homewood, IL: Dow Jones-Irwin: pp.227-284.
10. Fiscal Federalism (will be covered if time permits)
Background: Tresch (2008), pp. 423-455.
Akai, Nobuo and M. Sakata. 2002. “Fiscal Decentralization Contributed to Economic
Growth: Evidence from State-Level Cross-Section Data for the United States,” Journal of
Urban Economics, 52: 93-108.
Arzhagi, Mohammad and J. Vernon Henderson. 2005. “Why Countries are Fiscally
Decentralizing,” Journal of Public Economics 89: 1157-1189.
*Hammond, George and Mehmet S. Tosun. 2011. “The Impact of Local Decentralization
on Economic Growth: Evidence from U.S. Counties,” Journal of Regional Science 51
(1): 47-64.
*Martinez-Vaquez, Jorge and R.M. McNab. 2003. “Fiscal Decentralization and
Economic Growth,” World Development, 31 (9): 1597-1616.
McLure, Charles E. 2001. “The Tax Assignment Problem: Ruminations on How Theory
and Practice Depend on History,” National Tax Journal 54 (2): 339-364.
Oates, Wallace E. 1993. “Fiscal Decentralization and Economic Development,”
National Tax Journal, 46 (2): 237-243.
Oates, Wallace E. 1972. Fiscal Federalism. New York, NY: Harcourt Brace Jovanovich,
Academic Press.
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Panizza, Ugo. 1999. ”On the Determinants of Fiscal Centralization: Theory and
Evidence,” Journal of Public Economics 74: 97-139.
Stansel, Dean. 2005. “Local decentralization and Local Economic Growth: A CrossSectional Examination of US Metropolitan Areas,” Journal of Urban Economics, 57: 5572.
Tosun, Mehmet S. and Serdar Yilmaz. 2010. “Centralization, Decentralization and
Conflict in the Middle East and North Africa,” Middle East Development Journal 2 (1):
1-14. (earlier version published as World Bank MENA Working Paper Series No.51 and
World Bank Policy Research Working Paper 4774.
http://econ.worldbank.org/external/default/main?pagePK=64165259&theSitePK=469372
&piPK=64165421&menuPK=64166093&entityID=000158349_20081110112652
*Tresch, Richard. 2002. Public Finance. Chapters 29 and 30, pp. 831-891.
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