UNIVERSITY OF MANAGEMENT AND TECHNOLOGY
SCHOOL OF GOVERNANCE AND SOCIETY
COURSE MANUAL
(Including Course Outline)
ECONOMIC PRINCIPLES OF PUBLIC POLICY
PROGRAM: Masters in Public Administration
PA 316: Economic Principles of Public Policy
FALL 2015
Class Timings—Friday—18:00-21:00
Classroom: L3/09
1
Resource Person: Seemi Waheed
Professor of Public Policy and Public Administration
Focus areas: Public Policy Analysis, Governance,
Public Finance, Poverty and Microfinance,
Institution and Organization Development
Contact: Wednesday between 1500-1600 Hrs, (or by appointment),
Email: seemi.waheed@umt.edu.pk
Course Description: The course aims to introduce students to the application of
microeconomics and macroeconomics principles to policy questions. At the end of the
course you should be able to apply these principles to public policy, understand how markets
behave, distribution of goods and services and efficiency and distributional effect of
government intervention in the market. Microeconomics studies the allocation of scarce
resources among agents in a society. These agents consist of consumers, firms and labour.
Resources among agents are allocated through markets, the course, therefore, will explore
the theory of perfectly competitive market and imperfect markets. Markets, generally, are
imperfect with a few perfect market examples. Macroeconomics focuses on the aggregate
economic activity. It, therefore, measures, overall growth, stability and exchange of goods
and services.
Introduction to the Course Manual
This course manual has been divided into two parts. Part I deals with the structural aspects of
the course. Part II focuses, learning strategies, contents, mandatory and recommended
readings, and related sources.
PART I - COURSE STRUCTURE
Course Requirements:
Your grade will be determined as follows:
a) Grading
1) Journal
15 %
2) Class Participation, Discussion, Presentations – 15%
Please be prepared to participate in class discussions and short presentation. Any
one can be asked to present the topic of the day. This means, prior to coming to
the class you are expected to have read the assigned readings of the topic. Every
topic has theoretical and applied readings. You are also expected to attempt the
discussion questions at the end of the assigned chapters. Thus, your class
participation and quizzes are very much contingent on readings.
3) Quizzes - 10 %.
4) Attendance -10 %
5) Mid-term exams – 15%
6) Final exams – 35 %
Total 100%
Journal
An important element in the course is applying the concepts learned in the course, the
problems to the real world as they emerge. A measure of how well each student makes the
connection between these concepts and real world events will be the journal each participant
submits on the second last day of the classes. The journal must contain at least ten entries
that explain that how an entry or a portion of an article uses a concept or concepts discussed
2
in the course. The articles may be drawn from a wide variety of sources including The
Economist, Business and Economic Review of the Daily Dawn, The Daily Business
Recorder, State Bank of Pakistan Annual Report and World Development Report. There
should be at least four articles from The Economist. The journal entry will include a proper
bibliographical citation for the article, a brief explanation (one or two paragraph) how the
article is relevant to the concept/s and a photocopy of the article with the pertinent portion
highlighted. Each journal entry must involve a separate article. Your grade on the journal
will be based on how well you explain the economic concept/s using correct citation and the
number and quality of your entry choices.
Class participation/Discussion:
For each topic, there will be one or two student discussion leaders. The discussion leaders will
present the major points of the assigned readings, facilitate discussion of how the readings are
interrelated (coming up with discussion questions), present controversial features of the readings,
if any, and critically evaluate the readings. Leading class discussion is NOT summarizing the
readings. Each student will lead or co-lead class discussion at least once.
Case study Discussion
The two case studies describe real situation in which a public or private decision maker must sift
large amount of information in order to determine a course of action most appropriate. The cases
are almost self-contained. However, you are encouraged to do your own research as well. Each
case study is different and there is no single approach that will always be effective. Nonetheless,
there are some questions that should help focus your thinking:
Who are the principal actors in the case?
What are the long and short run goals and incentive of each?
How is each rewarded?
What are the options available?
What is the decision to be made?
Are the apparent constraints really constraints or might some be mitigated?
Are the long run alternatives different than those in the short run?
What are others likely to do in response to each alternative?
What are the advantages and disadvantages of each option?
Which are quantifiable?
What bounds you can put on those which are not quantifiable?
Can the problems be broken into several simple problems?
Finally, there is no unique “right” answer. Usually there are different approaches to solving the
problem. Some of these differing approaches may be equally valid while others may be less
valid.
b) Grading criteria
1) Ability for Critical Thinking;
2) Originality of substance and ideas;
3) Coherent organization of content;
4) Scholarship (citations and references where appropriate);
5) Adherence to Research Methods;
6) Academic Integrity.
3
All assignments and material must be turned in by the dates assigned. Please plan
accordingly!
Attendance:
Be regular and punctual. If you do not attend, you cannot participate. Plan personal vacation,
social commitments, and travel around the class schedule.
Readings:
There are readings for each topic. Where link of the readings is indicated, the student should
download and read; in other case hard copy will be provided. These readings are designed to help
you think about the topic critically. In addition, students are strongly urged to read The Business
and Economic Review of The Dawn, Business Recorder and The Economist
Course material and readings: All of the course material referred to in this module is
available on the internet or in the UMT library or with the SGS, on first come first served
basis. Participants may like to make copies of required material for their convenience. Online
resources are also available in the Library through the learning resource center where you
can access academic journals of international repute. Besides, you are encouraged to seek out
relevant literature available other libraries.
Academic Integrity Policy: Academic integrity is the central value of an academic community.
It is expected that graduate students will neither engage in nor facilitate cheating (using or
attempting to use unauthorized materials, information, or study aids), fabrication (falsification or
invention of any information or citation), or plagiarism (representing the words or ideas of others
as one’s own) in their academic work. The Academic Integrity Policy contains strict
sanctions, including expulsion, for all forms of academic dishonesty. Students found guilty
of violating other UMT norms, such as engaging in moral and ethical misconduct, or in
actions that are harmful to others or threaten the orderliness and wellbeing of the campus,
are subject to equally strict sanctions in accordance with these norms and UMT
regulations.
Make-up Exams and Late Assignments: There will be no make-up exams, unless there is a
valid (documented) reason for not taking the scheduled exams, and prior arrangements have
been made with the instructor. Five percent of the grade will be deducted for each day an
assignment is late.
The Grading system
Grading scheme
Letter
Grades
A+/A
AB+
B
BC+
C
CF
Grade Points
4.0
3.7
3.3
3.0
2.7
2.3
2.0
1.7
0.0
Course summary
4
a) Credit hours - 3
b) Duration – One semester (45 contact hours)
c) Schedule - . 6 to 9 pm Fridays
PART II - COURSE OUTLINE, READINGS,
LEARNING MODES, SCHEDULE
Class
1
Oct. 2,
2015
Topic
Readings (mandatory)
Introduction—Capacity assessment
and course introduction and
fundamental of economics. Why study
Economics?
Chapter 1 Samuelson and Nordhaus
Assignment
and due date
LD
Learning outcome: understand the scarcity
and allocation of resources, factors of
production etc.
2
Oct.9
3
Oct. 16
Application of Demand and supply
Learning outcome: apply concepts of
supply and demand to real life problems
and understand price mechanism and
elasticity
Consumer Behavior: Maximizing
utility
Learning outcome: Comprehend and
apply the concept of utility, marginal
utility, substitution and income effect
Chapter 4 Samuelson and Nordhaus
Chapter 4 Mankiw
David Lucas, The Economic Cost of
Global Fuel subsidy
Faculty.haas.berkeley.edu/...
(LD)
Chapter 5 Samuelson and Nordhaus
“Money Where Your Mouth is”,
Economist, Nov. 10, 2013
(LD)
Oct. 23
If holiday then on October 30
4
Oct. 30
Production Theory and Application:
supply side and theory of firm
Chapter 6 and 7 Samuelson and
Nordhaus
Learning outcome: Know the cost of
producing goods and services (the supply
side) and how and why firms
reduce/increase output
Iffat Ara, (2005). Is Pakistan’s
Manufacturing Sector Competitive?
Conference Paper,
www.spdc.org.pk/Data/Publication/P
DF?CP-59.pdf
5
Nov. 6
Markets: Perfect Competition and
economic welfare
Learning outcome: know the conditions of
perfect competition, why perfect
competition an ideal, efficiency and
equity,
6
Nov. 13
Markets: Imperfect Competition
(LD)
Chapter 8 Samuelson and Nordhaus
Shleifer, Andrei, “Does Competition
Destroy Ethical Behavior?”
www.nber.org/papers/w10269.pd
f
Mukhopadhyay, Prasad, Jyoti,
“Competition in Markets Promotes
Economic Efficiency”,
www.cci.gov.in/May2011/Advocacy
/essay2012/jyoti.pdf
Chapter 9 and 10 Samuelson and
Nordhaus
Quiz 1
(IE)
Quiz 2
5
Learning outcome: Understand how
imperfect markets function and role of
government to regulate market
imperfection
7
Nov. 20
Market failure and Role of
Government
Learning outcome: Why markets fail?
And does government fill the gap for
failure? Why?
Nishtar, Sania (May 2008).
“Pakistan’s Covert Cartels”, News
“The Curse of Cartels” Business
Recorder, July 7, 2014
Stiglitz, Joseph, (latest edition)
Economics of Public Sector, Chapter
3 and 5, W W Norton and Company
Read all
material. Be
ready for case
presentation
“Options for Providing Relief to
Farmers”, The Dawn Business and
Economic Review, Sept. 14, 2015
Qdais, H.A. and Nassay Al.
H.I.(2001). “Effect of Pricing on
Water Conservation: A Case Study,”
Water Policy
www.researchgate.net/
8
Nov. 27
9
Dec. 4
Mid Term
Taxation, government subsidy and
economic development
Learning outcome: Taxation
fundamentals, what is subsidy and why
given, its interplay in development
Chapter 16 Samuelson and Nordhaus
Huzaima and Ikram, ‘Chapter 4 of the
Economic Survey of Pakistan 201314
www.huzaimaikram.com/downlo
ad/Budget.../08-FiscalDevelopment.pd
Zingel Peter- Wolfgang, 1986,
“Consumer Subsidies in Pakistan and
other South Asian Countries” The
Pakistan Development Review, XXV,
4
www.sai.uni-heidelberg.de/.../zi...
10
Dec. 11
Measuring Economic activity
Learning outcome: why measuring
economic activity important and how it is
measured
11
Dec. 18
Economic Growth, stability and
development in Pakistan
Learning outcome: Comprehend growth,
stability and development and see its
application in Pakistan
Chapter 21 Samuelson and Nordhaus
Chapter 23 Mankiw
“Overview of the economy of
Pakistan”
http://www.finance.gov.pk/survey/ch
apters_14/Overview.pdf
Chapter 27 Samuelson and Nordhaus
State Bank of Pakistan, Third
Quarterly Report 2014, “The State of
Pakistan’s Economy” p. 1-10.
www.sbp.org.pk/reports/quarterly
Easterly, William (June 2001). “The
Political Economy of Growth witout
development: A case Study of
6
Pakistan” World Bank.
http://williameasterly.files.wordpress.
com
12
Dec. 25
13
Jan.1,
2016
Quaid-i- Azam Day
14
Jan. 8,
2016
Income inequality, poverty and cost of
living
Chapter 20 and 24 Mankiw
Learning outcome: Understand the
economics of poverty and inequality and
analyze it in Pakistan context
Amir, Hina and Bilal, Kanwal, (2011)
“Income inequality Measurement in
Pakistan and its four Provinces by
Lorenz Curve” www.aessweb.com
Trade, investment and Development
Chapter 15 Samuelson and Nordhaus
Learning outcome: Understand the
application of inter and intra trade
between nations and development
Quiz 3
Zaidi, Akber, S. (2005) 2nd edition.
Issues in Pakistan’s Economy,
chapter 21, OUP
Bhattarai, Keshab, Trade, Growth and
Poverty in South Asia
http://www.hull.ac.uk/php/ecskrb/Tra
de_SAsia_paper_Routledge.pdf
15
Jan. 15
2016
16
Jan.
2016
Case Study Discussion
Kher, Priyanka, Political Economy of
Regional Integration, background
paper, no. RVC 5 UNCTAD
http://unctad.org/en/PublicationsLibra
ry/ecidc2013misc1_bp5.pdf
Pakistani Textile Exports, Fast Track
and the US War on Terror: A
collision of Foreign and Trade Policy
Goals (Kennedy School of
Government)
Investment/Benefit-Cost analysis
Chapter 11 Stiglitz
Learning outcome: importance of CBA,
differentiate between social and private
cost, use of discount rate and consumer
surplus
“The Social Discount Rate in
Developing Countries,” FED notes
www.federalreserve.gov › ... ›
Prior to
coming to the
class read the
case
thoroughly.
This will
require at least
4 readings.
Prepare your
three page
analysis and
submit
through email
on 16 January
9.00 pm
Submit
journal
Vinning, Aidan R. and Weimer L.
David, “The Application of Cost
Benefit Analysis,” LaFollete Policy
Report, The University of Wisconsin
www.lafollette.wisc.edu/.../...
7
Zuberi M. A. “Hollow Monetary
Policy,” Business Recorder, 15-92015
17
Jan. 15
2016
Final Exam
Recommended Readings
1. Barry P Keating and Maryann O. Keating, Microeconomics for Public Managers
2. McGuigan, Moyer, and Harris, Managerial Economics: Applications, Strategy, and
Tactics (Ninth edition)
3.Anne Steinemann Microeconomics for Public Decisions Askmar Publishing, 2011
4. Gregory Mankiw, Principles of Microeconomics Cengage Learning (latest)
5. Samuelson and Nordhaus, 2014 Economics 19th edition, McGraw Hill
6. Stiglitz, Joseph, Economics of the Public Sector, W. W Norton and Company
8