Finance
PROF. EUGENIO PELUSO; PROF. MASSIMO BORDIGNON
COURSE AIMS
The course aims to give the student the tools needed for understanding the
problems of the public sector, from the standpoint of economic theory. The course
presents theoretical reasoning for the existence of the public sector, and analyzes
the trend of Italy's public sector spending and the sources of its financing; the rules
for budget decisions are also explained. After the study of fiscal federalism and its
application in Italy, the course looks at the theoretical principles for creating a
good taxation system and analyzes the actual tax burden. The characteristics and
properties of Italy's tax system are also discussed.
COURSE CONTENT
1. Reasons for public intervention (5 hours - Peluso) (Welfare economics: Pareto
efficiency, I and II theorems of welfare; market failures).
Rosen: Chapter(s) 4; Giarda: Part I.
2. Public goods and externalities (5 hours - Peluso) (free riding, Lindahl
equilibrium, benefit principle, corrections of externalities: private solutions and
public solutions).
Rosen: Chapter(s) 5 and 6; Giarda Part I.
3. Social welfare, inequality and equity (5 hours - Peluso).
Rosen: Chapter(s) 8.
4. Education and opportunities (5 hours - Peluso), extra readings.
5. Pensions (5 hours - Peluso).
Rosen: Chapter(s) 10; Giarda Part VI.
6. Income, capital and redistribution (5 hours - Peluso), extra readings.
7. Introduction to Italian public finance and budget rules (5 hours - Bordignon).
Giarda: part II, pages 64-105; Rosen: Chapter(s) 2.
8. Classification of taxes; objectives and constraints of a taxation system (3 hours
- Bordignon).
Giarda: Part III, pages 3-8; Rosen: Chapter(s) 13.
9. Clear-cut loss from taxation and applications to the market for labour, goods
and savings, Ramsey rule, Barone theorem; implications for the definition of
income (7 hours - Bordignon).
Giarda: part III, pages10-38; Rosen: Chapter(s) 14
10. Prevalence: perfect competition and monopoly (5 hours - Bordignon).
Rosen: Chapter(s)12; Giarda: part III, pages 78-88.
11. Personal income tax and the progressive nature of taxation (5 hours Bordignon). Rosen: Chapter(s) 15; Giarda: part III, pages 58-65.
12. Institutional aspects of Italy's taxation system (5 hours - Bordignon).
BG, Rosen, Chapter(s)16-18.
READING LIST
Textbooks
P. GIARDA,“Appunti per il corso di Scienza delle finanze” (notes).
H.S. ROSEN-T. GAYER, Scienza delle Finanze, MacGraw-Hill, 2010.
P. BOSI-M.C. GUERRA, I tributi nell’economia Italiana, Il Mulino, 2012.
TEACHING METHOD
Lectures, with some presentations by experts.
ASSESSMENT METHOD
Written test running for 2.5 hours covering the entire course. The student will need to
answer five open-ended questions about various course topics, with 2-3 of the questions
being mandatory and the others selected from a range of questions. All questions will be
weighted equally.
Economic students taking the course for eight credits: all parts.
Students taking the course for five credits: the Peluso or Bordignon part, with only three
questions.
Law students taking the course for 6, 7 or 8 credits: the analytical parts of the
programme may be omitted and substituted by study of Title V of the Constitution or study
of the court system.
The decision about offering a mid-term exam will be taken by mid-October.
NOTES
Further information can be found on the lecturer's webpage at
http://docenti.unicatt.it/web/searchByName.do?language=ENG, or on the Faculty notice
board.