Public Economics 1

Module description

The Public Economics modules (BEE3047 & BEE3048) are essentially an evaluation of the role of the public sector in a market economy. The modules use the most recent economic analysis to consider the efficiency and redistributive effects of government intervention. BEE3047 will study the role of government in promoting the efficiency objective in the presence of several sources of market failures, while BEE3048 will focus more on redistribution policies to promote government’s equity objective. We will study various sources of market failures and how appropriately designed taxation and expenditure policies of the government or emergence of alternative institutional arrangements for collective action can minimize if not eliminate inefficiencies in the allocation of scarce economic resources.

Additional Information:

Internationalisation

Due to the broad scope of this module, internationalization and globalisation are embedded in the content of this module. Topics such as externalities and public goods will explore global ramifications of actions of countries, e.g., ramifications of international emissions on climate change.

Sustainability

Sustainability is an important objective of public policy. An important theme of public economics is public choice and social welfare. Issues such as interpersonal and intergenerational equity will be studied. It is in the context of equity, i.e., ensuring all including future generations have fair access to economic resources does the issue of sustainability gain importance.

Employability

This module will help students understand the basic aims and objectives of government policy and the various roles the government plays in the working of the economy. They will learn about the criteria that the government employs to choose between various investment projects and about various tools and instruments such as taxation, subsidization, regulation, and direct production that it has at its disposal to achieve its objectives of economic efficiency and equity. This module hence will be of extreme importance to students aiming to pursue a career in public policy and in the public sector.

Full module specification

Module title:Public Economics 1
Module code:BEE3047
Module level:3
Academic year:2016/7
Module lecturers:
  • Dr Sushama Murty - Convenor
Module credit:15
ECTS value:

7.5

Pre-requisites:

BEE2024 or BEE2025

Co-requisites:

None

Duration of module: Duration (weeks) - term 2:

11

Module aims

This module focuses more on the role of government in economic activities due to the prevalence of various sources of market failures. In particular, we will focus on market failures due to the presence of externalities, public goods, and market imperfections due to non-competitive forces and increasing returns in the provision of several services. We will learn about the corrective instruments and mechanisms that the government can employ to solve these problems and the emergence of alternative institutional mechanisms formed by collective action of the agents involved.

ILO: Module-specific skills

  • 1. explain in detail why we may need a public sector
  • 2. understand the twin objectives of the government: economic efficiency and equity
  • 3. characterize economic efficiency
  • 4. understand the formulation of equity considerations through social welfare functions
  • 5. understand the trade-offs between equity and efficiency
  • 6. study the theoretical methods for cost-benefit analysis of public sector projects
  • 7. understand the market failure due to public goods and various corrective mechanisms
  • 8. understand the market failure due to externalities and corrective government policy instruments
  • 9. understand the emergence of other institutional alternatives to the government for correcting externalities
  • 10. have an understanding about the problem of climate change and intergenerational equity issues

ILO: Discipline-specific skills

  • 11. acquire the skill to apply modern economic thinking to the public sector
  • 12. employ a number of economic tools and techniques and economic reasoning acquired in core courses in micro and macroeconomics to study issues in public policy and the public sector

ILO: Personal and key skills

  • 13. use the tools and reasoning learnt in the module to analyse various policy related issues
  • 14. have a good understanding of the aims and objectives of the public sector, its methodology and the policy tools that it employs to meet its objectives

Learning activities and teaching methods (given in hours of study time)

Scheduled Learning and Teaching ActivitiesGuided independent studyPlacement / study abroad
251250

Details of learning activities and teaching methods

CategoryHours of study timeDescription
Contact hours20Lectures
5Tutorials

Formative assessment

Form of assessmentSize of the assessment (eg length / duration)ILOs assessedFeedback method
Exercises and problem sheetsHome assignment1-12Exercises will be discussed in the tutorials

Summative assessment (% of credit)

CourseworkWritten examsPractical exams
08020

Details of summative assessment

Form of assessment% of creditSize of the assessment (eg length / duration)ILOs assessedFeedback method
Group Presentations plus group reports on presentations20See assignment brief1-14Oral after presentaion
Examination802 hours1-14Marking
0
0
0
0

Details of re-assessment (where required by referral or deferral)

Original form of assessmentForm of re-assessmentILOs re-assessedTimescale for re-assessment
Examination and group presentationExamination (100%)1-14Aug/Sep

Syllabus plan

  • Pareto Efficiency and the two fundamental theorem of welfare economics
  • Cost-benefit analysis
  • Public goods
  • Externalities
  • Climate change

Indicative learning resources - Basic reading

Basic reading:

Hindricks, J. and G. D. Myles (2006), Intermediate Public Economics. MIT Press.

A number of articles from international journals

Robin Boadway and Neil Bruce; Welfare Economics, Blackwell

Elinor Ostrom; Governing the commons: The evolution of institutions for collective action. Cambridge University Press

Module has an active ELE page?

Yes

Indicative learning resources - Web based and electronic resources

ELE – http://vle.exeter.ac.uk/course/view.php?id=2307

Origin date

01/09/2007

Last revision date

22/09/2015