Temple University- Main Campus
College of Liberal Arts- Economics Department
Fall, 2013
I. Course: Public Finance—Ec. 3512 Sec. 001 CRN: 5547
II. Meets: M-W-F 11:00-- 11:50 SPK 212
III: Overview: This is a standard course in Public Finance, principally with a national focus, but with some attention to state and local issues as well. It uses some macroeconomic theory to examine the impact of public sector activities like physical and human capital investment, growth-fostering activities, deficits and surpluses; and more usually, microeconomic theory to examine the justification for public sector provision-- through direct production or mandate-- of public goods and merit goods, the costs and benefits of activities like education, waste treatment, highway construction and maintenance, and the fairness and efficiency of tax structures.
Following our text, I have divided it roughly into four parts:
A.
the role of government in a modern market economy, and the theoretical foundations of government
activities;
B.
the broad details of public budget expenditures, at all levels of government, and the cost-benefits principles that should, but seldom do, guide expenditure decisions;
C.
the increasingly significant fraction of public budgets devoted to social insurance and income
redistribution;
D. the broad principles of wise and fair taxation and other financing of public activity
[These correspond very roughly to Parts 1; 2; 3 and 4 in our text.]
Economists in general have a knee-jerk preference for markets: private sector production of goods and services, and market solutions to perceived social problems. The burden of proof has been on those who urge
“government intervention” to show why it is necessary. There is, however, a large and respected minority view: that capitalism and markets have generated many failures, or exposed many weaknesses that require public sector attention. Government, and indeed all things Public, have been poorly understood by the last few generations of Americans, and one task of this course is to develop in students an appreciation of The Public
Interest and its guardian, government.
IV. Textbooks: Gruber, Public Finance and Public Policy, 3 rd
ed.
, Worth, 2011
at our bookstore, used…………………………. $???
at our bookstore, to rent……………………….. $ ??
ask at bookstore, ebook………………………… $ ??
Companion Website: www.worthpublishers.com/gruber
Dollars & Sense, Current Economic Issues, 16 th
ed ., Economic Affairs Bureau, Boston
ISBN-978-878585-91-2 $???? at our bookstore
Class handouts
V. Instructor: J. Tucker Taylor, Ph.D. Off. Tel: 215-204-5039; H: 610-872-3489 (yes, you may)
VI. Office and Hours: 808 Ritter Annex, Main Campus
Email: tucker@temple.edu
(phoning me will be faster)- as above
Hours: M – W – F: 8:30—10:50 most days
Tu and Th: 9:30—12:00 most days
Appointments always recommended
Dept. Office : 873 Ritter Annex-- Janice Vincent, Dept. Sec’y----- 215-204-8880

VII: Exams and Grades:
Exam #1 …………………………………………….17 pts.
Exam #2 …………………………………….………20 pts.
Exam #3 …………………………………………….17 pts.
Exam #4 (Final)…………….…………….…...…….22 pts.
Essays (2 @ 5 pts each)……,…………………….. 10 pts.
Attendance & Participation….………………..….... 5 pts.
Homeworks…(9-18 sets.)..……………………….… 9 pts. Total = 100 pts.
VIII: Course Expectations-Part A: Attendance and Missed Exams
Attendance at all 42 class meetings is required, will be spot-checked and is counted toward the grade, as indicated above. The 5 points is for perfect attendance. Remember Woody Allen’s dictum: “Ninety per cent of success is just showing up.” Homeworks will usually be accepted only on the day they are due. They will be graded only for apparent effort, not correctness of answers! N.B. This is an easy 14 points, class. Take advantage of it.
Exams taken late , for whatever reason, will be subject to a 10 percentage point discount (one full grade). If an exam is missed, please phone (not email) me immediately , at office and home until you speak with me, to arrange a make-up exam the following day or before the next class . If a student does not contact the instructor on the day of the exam to arrange a make-up, a Zero will be inserted and the course should probably be dropped; if arrangements to take an immediate make-up cannot be made, a dummy grade equal to the average of the other two (except the Final) minus one full grade, or a C-, whichever is lower, will be inserted.
You may not simply “opt” to do this; it is for medical or other emergencies.
Textbook chapters should be read before they are discussed in class. Not every point covered in the text will be repeated and highlighted in class, but students are expected to have read every line (except where only selected pages from a chapter are assigned). The traditional amount of time a college student was expected to devote to study was twice the class hours, and that is the standard I adopt here- thus, about 5 hours per week (O.K. 4 hours). There is nearly 600 pages of textbook material, plus a fair number of (somewhat technically easier) handouts, and the Issues book to read, thus about 40-50 pages a week or 20+ pages per class period. The text is tough reading; the handouts and Issues book will be easier.
Homeworks will usually be end-of-chapter Questions and Problems, plus some of the Web-site Self-Tests.
IX: Course expectations- Part B:
More than mere attendance is expected of responsible students, especially in an upper level course. Students often ask, “How shall I study for this course?” Best advice:
* Read the text and other assigned material
* Do the Questions and Problems at the end of each chapter, even if not specifically assigned as Homeworks-
to-be-Submitted. These are designed as pedagogical aids, and should be good exam preparation.
* Take advantage of the website.
* Attend and ask questions
* Take notes in class.

X. Classroom etiquette:
Please be seated and prepared for class to begin each day at 11:00 AM. Some materials are handed out at the beginning of class, and attendance may be taken then. Cell phones, of course, must turned all the way off , not just on buzzer or vibrator. Laptops are not permitted for notetaking, nor are cell phones to be used in exams as calculators.
XI. Course Outline--- See below
XII. Feedback:
I’m eager to tailor (Taylor?) the course somewhat- within the limits of what needs to be covered in this standard course- to your needs and desires. Don’t hesitate to give me your reactions to how the course is going at intervals throughout the course, verbal or written. I will try to adjust and improve the pace, presentation or other factors as much as possible with this guidance.
XIII.
Interesting Websites: http://www.epi.org/...… short economics pieces, progressive viewpoint [Very good, in my opinion—JTT] http://www.ips-dc.org...................................................multi-issue progressive think tank http://library.wustl.edu/databases/f.html………………………………………………………..data
http://www.bea.doc.gov …………………………….Federal gov’s Bureau of Economic Analysis:
(data on GDP, Price Indices, Unemployment, much else) http://toomuchonline.org/...............................dedicated
to the notion that our world would be considerably more
caring, prosperous and democratic if we narrowed the vast gap that divides our
wealthy from everyone else. http://www.levy.org............................................................................................macroeconomics thinktank http://www.leftbusinessobserver.com............................ ………………..The economics left’s point-of-view. http://www.dollarsandsense.org
................................................................ Ditto
Try googling “Progressive Economics blogs”
“James K. Galbraith”………………………expert on unemployment, the labor market
“ Robert Reich” ………………… another expert on unemployment and labor markets
“Joseph Stiglitz”………………………… another liberal
Read the columnists Paul Krugman (Nobelist) and Charles Blow and David Brooks in the NYT
(Friday and Sat. )—two liberals and a conservative
Read the columnist James Surowecki in The New Yorker magazine
Watch the brief (3:24 mins) YouTube video http://www.sharedprosperity.org/av/toward.html

XI. Course Outline: [ Subject to continual revision as the semester progresses ]
(FINISH THE DATES AND OTHER REVISIONS!)
Wk Dates Topics Assignments
PART ONE- MICRO AND MACRO FOUNDATIONS OF PUBLIC FINANCE
1 08/26, 28, 30 The basic economic problem—limited resources, unlimited greed
Why study public finance? The Size and Growth of Government Ch. 1
2 09/xx, 4, 6 Some Microeconomics Background; Supply, Demand and Markets Ch. 2
3 09/09. 11, 13 Using Data: Empirical Studies; Statistics Ch. 3
[9 th
is last day to DROP ]
……………………………………………………………………………………………..
4 02/11,13,15 Government Budgets and Deficits Ch. 4;
Exam #1
PART TWO-EXTERNALITIES; PUBLIC AND MERIT GOODS
5
6
02/18,20,22
02/25,27,01
Externalities: Theory; Externalities: Applics: Environmental Health, Human Health Ch. 5, 6
Public Goods; Cost-Benefit Analysis Ch. 7, 8
7 03/04,06,08 The Proper Role of Government in Education Ch. 11;
Exam #2
S P R I N G B R E A K
PART THREE- GOVERNMENT AS GUARANTOR OF MINIMUM INCOME AND HEALTH CARE
8 03/18,20,22 Social Insurance in general; Social Security Ch. 12, 13
9 03/25,27,29 Health Care Insurance I (Private) & II (Public) Ch. 15,16
[22 nd
is last day to WITHDRAW ]
10 04/01,03,05 Other Social Insurance (Unemployment; Disability; Workers’ Comp); Ch. 14
“Welfare” and Income Distribution Ch. 17
11 04/08,10,12 Catch – up
Exam #3
PART FOUR- HOW SHALL WE PAY FOR IT ALL?
12
13
04/15,17,19
04/22,24,26
Taxation Around the World; Tax Incidence Ch. 18, 19
Tax Inefficiencies and Optimal Taxation; Ch. 20
Taxing Labor (Income Taxes) 21
14 04/29,01,03 Taxes on Wealth (Real Estate and other); Wrap-up Ch. 23
15 05/06, study days Catch-up ???
16 FINAL EXAM- Mon. 05/13, 8:00----- Here Exam #4