Poslední úprava: doc. PhDr. Martin Gregor, Ph.D. (01.10.2010)
The course covers selected advanced topics in the economics of the public sector. Part I is devoted to the optimal provision of public goods, user charges, contracting issues with private providers, and properties of the markets with public goods. Part II studies tax incidence in closed and open economies, commodity taxation, and key topics in the optimal taxation of direct income. Part III examines corporate taxation, tax and spending competition on the international and subnational level, and the effects of fiscal decentralization on taxation and public spending.
Poslední úprava: doc. PhDr. Martin Gregor, Ph.D. (01.10.2010)
The course covers selected advanced topics in the economics of the public sector. Part I is devoted to the optimal provision of public goods, user charges, contracting issues with private providers, and properties of the markets with public goods. Part II studies tax incidence in closed and open economies, commodity taxation, and key topics in the optimal taxation of direct income. Part III examines corporate taxation, tax and spending competition on the international and subnational level, and the effects of fiscal decentralization on taxation and public spending.
Literatura
Poslední úprava: doc. PhDr. Martin Gregor, Ph.D. (01.10.2010)
Hindriks, J., Myles, G.D. (2006). Intermediate Public Economics, MIT Press. HM. Our IES library (EII-1796) disposes with a sufficient number of long-loan copies. The textbook is a useful starting point, but is far from being comprehensive, and cannot substitute for the research papers.
Batina, R.G., Ihori, T. (2005) Public Goods: Theories and Evidence, Springer BI, IES library EII-1660
Leach, J. (2004) A Course in Public Economics, Cambridge University Press. LJ, available as PDF
Myles, G.D. (2002) Public Economics, 3rd ed., Cambridge University Press, GM, available as PDF
Salanié, B. (2003) The Economics of Taxation. MIT Press, Cambridge, Mass. BS, available as PDF
Throughout the course, we?ll use dozens of recent research papers and a couple of other books. A detailed list will be maintained and revised on the course webpage.
Sylabus -
Poslední úprava: doc. PhDr. Martin Gregor, Ph.D. (01.10.2010)
1. Public spending
a) The optimal amount of the public good. The first-best provision of a pure public good. Samuelson condition. Public intermediate goods and the optimal provision of public infrastructure. Dedicated taxes. Optimal financing of public goods through distortionary taxation and user fees: the second-best provision. Pigou effect. Can the second-best amount exceed the first-best amount?
HM 101-110; BI 9-12, 20-21, 29-33; GM 282-301
Auerbach, A. (2010) Public Finance in Practice and Theory. CESifo Economic Studies 56 (1), 1-20. (especially pp. 13-17)
Brent, R. J. (2006), Public goods. In: Applied Cost Benefit Analysis. Ch. 6, available as PDF
Oakland, W. (2001), Theory of Public Goods. Handbook of Public Economics, Vol. 2 (9), Sections 1-3.3, available as PDF
b) "Gratis" economy. In a pure market economy with privately provided public goods, does GDP measure welfare? Market provision under small/large number of participants. Monopoly seller of a public good: uniform vs. discriminatory prices. Charitable giving as a public good. Crowding-out effect of public transfers on private charity: neutrality of transfers. Income invariance. Charitable lotteries. Fund-raising games: contribution and subscription campaigns. Complementarities between public and private good consumptions, and complementarities between public good contributions. Markets with club goods for homogenous/heterogeneous consumers.
HM 124-128, 132-136; BI 115-121; BS 163-166; LJ 175-184
Morgan, J. (2000) Financing Public Goods by Means of Lotteries. The Review of Economic Studies 67 (4), 761-784.
Oakland, W. (2001) Theory of Public Goods, Handbook of Public Economics, Vol. 2 (9), Section 4, available as PDF
c) User fees. Club goods with fixed and variable utilization. Two-part tariff. Buffet versus usage pricing. User fee to correct for rationing and for distortionary tax revenue. Privatization, government ownership, and the marginal cost of public funds. A few lessons for the applied cost-benefit analysis.
HM 143-154; BI 306-307; LJ 191-198
Bai, Chong-En; Lu, Yi; Tao, Zhigang (2009) Excludable public goods: Pricing and social welfare maximization, Economics Letters 103 (2009) 72-74.
Brent, R. J. (2006). User fees, in: Applied Cost Benefit Analysis. Ch. 12.1-3, available as PDF
Mueller, D. (2003). Public Choice III, Cambridge University Press, 183-198, available as PDF
Winston, C. (2006). Government Failure vs. Market Failure: Microeconomic Policy Research and Government Performance. AEI-Brookings Center for Regulatory Studies, Ch. 1, 2, 5, 6, available as PDF
d) Outsourcing and contracting. Traditional contracting versus public-private partnerships.
Iossa, Elisabetta and Martimort, David, The Simple Micro-Economics of Public-Private Partnerships (December 2008). CEIS Working Paper No. 139
Andreas Bentz, Paul A. Grout, Maija L. Halonen, What Should Governments Buy from the Private Sector-Assets or Services? October 12, 2004, mimeo.
2. Taxation
a) Tax incidence. In the end, who pays the tax? Economic vs. legal (statutory) tax incidence. Partial vs. general equilibrium models. Income and substitution effects and incidence measurement. Tax incidence in imperfectly competitive economy and in open economies. Incidence measurement.
BS 15-22; HM 238, 444-447; GM 337-346
Fullerton, D., Metcalf, G. E., Tax incidence, Handbook of Public Economics Vol. 4 (26), available as PDF
Kotlikoff, L., Summers, L., Tax incidence, Handbook of Public Economics, Vol. 2 (16), available as PDF
Viren, M. (2009). Does the Value-Added Tax Shift to Consumption Prices? AUCO Czech Economic Review, 3 (2), 123-142.
b) Optimal consumption taxation. To discriminate or not to discriminate, that is the question. Taxation trends. The inverse elasticity rule(s). Ramsey rule and Diamond?s modification to many-person rule. Dalton?s transfer principle. Corlett-Hague rule and taxation of leisure complements. Atkinson-Stiglitz?s non-linear income tax versus traditional Ramsey rule. The practical benefits of VAT and a uniform consumption tax. Piecemeal progressivity through reduced VAR rate. Tax distortions into leisure and household production. Ad valorem versus specific excise taxes under imperfect competition.
HM 447-469; BS 58-78, 187-192; GM 99-129, 346-361
Auerbach, A. (2010) Public Finance in Practice and Theory. CESifo Economic Studies 56 (1), 1-20. (see p. 2-7)
Eurostat 2008. Taxation trends in the European Union: Data for the EU Member States and Norway. Eurostat Statistical Books, available as PDF
Keen, M., 2007. VAT attacks! International Tax and Public Finance 14 (4), 365-382.
Keen, M. (2009) What Do (and Don?t) We Know about the Value Added Tax? A Review of Richard M. Bird and Pierre-Pascal Gendron?s The VAT in Developing and Transitional Countries, Journal of Economic Literature 47:1, 159-170.
S?rensen, P. B. (2007) The theory of optimal taxation: what is the policy relevance? International Tax and Public Finance, 14: 383-406.
The Economist, Buttonwood: Be thankful they don?t take it all, September 5th 2009
c) Optimal income taxation: selected topics. Mirrlees economy. Zero-at-the-top principle. The comprehensive income tax. The negative income tax. Tax tagging. Estimating elasticity of taxable income with the respect to marginal tax rates.
Mankiw, N. G., Weinzierl, M., Yagan, D. (2009) Optimal Taxation in Theory and Practice, Journal of Economic Perspectives, 23 (4), 147-174
Saez, E. and Slemrod, J.B. and Giertz, S.H., 2009, The elasticity of taxable income with respect to marginal tax rates: A critical review, NBER Working Paper 15012
Stiglitz, J. E. (2002) New perspectives on public finance: recent achievements and future challenges, Journal of Public Economics, 86, 341-360.
3. Corporate taxation and tax competition
a) Corporate taxation. Should the capital income tax be uniform or differentiated? Diamond-Mirrlees production efficiency theorem. Practical arguments in favor of the uniform taxation. A uniform capital income tax in an open economy with residence-based corporate income tax. A differentiated capital income tax in an open economy without residence-based corporate income tax. Ramsey rule and inverse elasticity rule for the source-based capital taxation. Input and output taxes. Profit tax. Modigliani-Miller theorem in a general framework. Investment incentives. Financial policy: debt vs. equity. Payout policy.
GM 227-254
Auerbach, A. J. (2006). The choice between income and consumption taxes: a primer. NBER Working Paper 12307
John O'Doherty, Government defends business tax regime, Financial Times 29 August 2007
Auerbach, A., Taxation and Corporate Financial Policy, Handbook of Public Economics, Vol. 3 (19), available as PDF
Auerbach, A., Devereux, M., and H. Simpson (2008) Taxing Corporate Income, NBER Working Papers 14494
S?rensen, P. B. (2007) The theory of optimal taxation: what is the policy relevance? International Tax and Public Finance, 14: 383-406.
S?rensen, P. B. (2007). Can capital income taxes survive? And should they? CESifo Economic Studies, 53, 1-57.
b) Tax competition. Perfect and imperfect competition. Perfect and imperfect mobility. Impossibility to redistribute from capital under perfect competition. Commodity taxation: origin vs. destination principle. The strategic advantage of being small. Tax exportation. Tax competition as remedy to dynamic inconsistency. Financing local public goods and public intermediate goods out of corporate income tax. Vertical tax externality and tax overlap. Estimating benefits from the corporate tax coordination in the EU.
MH 569-599
Brochner, J., Jensen, J., Svensson, P., Sorensen, P.B. (2007) The Dilemmas of Tax Coordination in the Enlarged European Union, CESifo Economic Studies, 53 (4), 561-595.
Devereux, M., Sorensen, P. B. (2005) The Corporate Income Tax: International Trends and Options for Fundamental Reforms. Paper prepared for the Working Party No. 2 of the Committee on Fiscal Affairs of the OECD. DG Economic and Financial Affairs, The European Commission
Hines, Jr., J. R, and Summers, L. H., (2009) How Globalization Affects Tax Design, NBER Working Paper No. 14664, January 2009
Wagner, W., Eijffinger, S., 2008, Efficiency of capital taxation in an open economy: tax competition versus tax exportation. International Tax and Public Finance 15 (6)
Wilson, J. D., Wildasin, D. E., 2004, Capital tax competition: bane or boon, Journal of Public Economics 88 (2004) 1065-1109.
c) Local public finance. Decentralization tradeoff in the provision of local public goods due to spillovers vs. heterogeneity. Oates? decentralization theorem. The tradeoff due to closeness vs. duplication. Excessive endogenous decentralization. Effective and ineffective yardstick competition. Spillovers, spill-ins and tax competition. Strategic spending competition. Tiebout sorting. Welfare shopping and when the poor chase the rich.
BI 299-322, 353-368; HM 543-558, 569-599
Besley, T. and Coate, S., 2009, Centralized versus decentralized provision of local public goods: a political economy approach, Journal of public economics, 87 (12), 2611-2637.
Oates, W. A. (2005) Toward A Second-Generation Theory of Fiscal Federalism, International Tax and Finance, 12, 349-373.
Oates, W. A. (2006) On the Theory and Practice of Fiscal Decentralization, IFIR Working Paper No. 2006-05
Ogawa, H., Wildasin, D.E., 2009, Think locally, act locally: spillovers, spillbacks, and efficient decentralized policymaking, American Economic Review 99:4, 1206-1217
Rubinfeld, D., The Economics of the Local Public Sector, Handbook of Public Economics, Vol. 2 (11), available as PDF
Poslední úprava: doc. PhDr. Martin Gregor, Ph.D. (01.10.2010)
1. Public spending
a) The optimal amount of the public good. The first-best provision of a pure public good. Samuelson condition. Public intermediate goods and the optimal provision of public infrastructure. Dedicated taxes. Optimal financing of public goods through distortionary taxation and user fees: the second-best provision. Pigou effect. Can the second-best amount exceed the first-best amount?
HM 101-110; BI 9-12, 20-21, 29-33; GM 282-301
Auerbach, A. (2010) Public Finance in Practice and Theory. CESifo Economic Studies 56 (1), 1-20. (especially pp. 13-17)
Brent, R. J. (2006), Public goods. In: Applied Cost Benefit Analysis. Ch. 6, available as PDF
Oakland, W. (2001), Theory of Public Goods. Handbook of Public Economics, Vol. 2 (9), Sections 1-3.3, available as PDF
b) "Gratis" economy. In a pure market economy with privately provided public goods, does GDP measure welfare? Market provision under small/large number of participants. Monopoly seller of a public good: uniform vs. discriminatory prices. Charitable giving as a public good. Crowding-out effect of public transfers on private charity: neutrality of transfers. Income invariance. Charitable lotteries. Fund-raising games: contribution and subscription campaigns. Complementarities between public and private good consumptions, and complementarities between public good contributions. Markets with club goods for homogenous/heterogeneous consumers.
HM 124-128, 132-136; BI 115-121; BS 163-166; LJ 175-184
Morgan, J. (2000) Financing Public Goods by Means of Lotteries. The Review of Economic Studies 67 (4), 761-784.
Oakland, W. (2001) Theory of Public Goods, Handbook of Public Economics, Vol. 2 (9), Section 4, available as PDF
c) User fees. Club goods with fixed and variable utilization. Two-part tariff. Buffet versus usage pricing. User fee to correct for rationing and for distortionary tax revenue. Privatization, government ownership, and the marginal cost of public funds. A few lessons for the applied cost-benefit analysis.
HM 143-154; BI 306-307; LJ 191-198
Bai, Chong-En; Lu, Yi; Tao, Zhigang (2009) Excludable public goods: Pricing and social welfare maximization, Economics Letters 103 (2009) 72-74.
Brent, R. J. (2006). User fees, in: Applied Cost Benefit Analysis. Ch. 12.1-3, available as PDF
Mueller, D. (2003). Public Choice III, Cambridge University Press, 183-198, available as PDF
Winston, C. (2006). Government Failure vs. Market Failure: Microeconomic Policy Research and Government Performance. AEI-Brookings Center for Regulatory Studies, Ch. 1, 2, 5, 6, available as PDF
d) Outsourcing and contracting. Traditional contracting versus public-private partnerships.
Iossa, Elisabetta and Martimort, David, The Simple Micro-Economics of Public-Private Partnerships (December 2008). CEIS Working Paper No. 139
Andreas Bentz, Paul A. Grout, Maija L. Halonen, What Should Governments Buy from the Private Sector-Assets or Services? October 12, 2004, mimeo.
2. Taxation
a) Tax incidence. In the end, who pays the tax? Economic vs. legal (statutory) tax incidence. Partial vs. general equilibrium models. Income and substitution effects and incidence measurement. Tax incidence in imperfectly competitive economy and in open economies. Incidence measurement.
BS 15-22; HM 238, 444-447; GM 337-346
Fullerton, D., Metcalf, G. E., Tax incidence, Handbook of Public Economics Vol. 4 (26), available as PDF
Kotlikoff, L., Summers, L., Tax incidence, Handbook of Public Economics, Vol. 2 (16), available as PDF
Viren, M. (2009). Does the Value-Added Tax Shift to Consumption Prices? AUCO Czech Economic Review, 3 (2), 123-142.
b) Optimal consumption taxation. To discriminate or not to discriminate, that is the question. Taxation trends. The inverse elasticity rule(s). Ramsey rule and Diamond?s modification to many-person rule. Dalton?s transfer principle. Corlett-Hague rule and taxation of leisure complements. Atkinson-Stiglitz?s non-linear income tax versus traditional Ramsey rule. The practical benefits of VAT and a uniform consumption tax. Piecemeal progressivity through reduced VAR rate. Tax distortions into leisure and household production. Ad valorem versus specific excise taxes under imperfect competition.
HM 447-469; BS 58-78, 187-192; GM 99-129, 346-361
Auerbach, A. (2010) Public Finance in Practice and Theory. CESifo Economic Studies 56 (1), 1-20. (see p. 2-7)
Eurostat 2008. Taxation trends in the European Union: Data for the EU Member States and Norway. Eurostat Statistical Books, available as PDF
Keen, M., 2007. VAT attacks! International Tax and Public Finance 14 (4), 365-382.
Keen, M. (2009) What Do (and Don?t) We Know about the Value Added Tax? A Review of Richard M. Bird and Pierre-Pascal Gendron?s The VAT in Developing and Transitional Countries, Journal of Economic Literature 47:1, 159-170.
S?rensen, P. B. (2007) The theory of optimal taxation: what is the policy relevance? International Tax and Public Finance, 14: 383-406.
The Economist, Buttonwood: Be thankful they don?t take it all, September 5th 2009
c) Optimal income taxation: selected topics. Mirrlees economy. Zero-at-the-top principle. The comprehensive income tax. The negative income tax. Tax tagging. Estimating elasticity of taxable income with the respect to marginal tax rates.
Mankiw, N. G., Weinzierl, M., Yagan, D. (2009) Optimal Taxation in Theory and Practice, Journal of Economic Perspectives, 23 (4), 147-174
Saez, E. and Slemrod, J.B. and Giertz, S.H., 2009, The elasticity of taxable income with respect to marginal tax rates: A critical review, NBER Working Paper 15012
Stiglitz, J. E. (2002) New perspectives on public finance: recent achievements and future challenges, Journal of Public Economics, 86, 341-360.
3. Corporate taxation and tax competition
a) Corporate taxation. Should the capital income tax be uniform or differentiated? Diamond-Mirrlees production efficiency theorem. Practical arguments in favor of the uniform taxation. A uniform capital income tax in an open economy with residence-based corporate income tax. A differentiated capital income tax in an open economy without residence-based corporate income tax. Ramsey rule and inverse elasticity rule for the source-based capital taxation. Input and output taxes. Profit tax. Modigliani-Miller theorem in a general framework. Investment incentives. Financial policy: debt vs. equity. Payout policy.
GM 227-254
Auerbach, A. J. (2006). The choice between income and consumption taxes: a primer. NBER Working Paper 12307
John O'Doherty, Government defends business tax regime, Financial Times 29 August 2007
Auerbach, A., Taxation and Corporate Financial Policy, Handbook of Public Economics, Vol. 3 (19), available as PDF
Auerbach, A., Devereux, M., and H. Simpson (2008) Taxing Corporate Income, NBER Working Papers 14494
S?rensen, P. B. (2007) The theory of optimal taxation: what is the policy relevance? International Tax and Public Finance, 14: 383-406.
S?rensen, P. B. (2007). Can capital income taxes survive? And should they? CESifo Economic Studies, 53, 1-57.
b) Tax competition. Perfect and imperfect competition. Perfect and imperfect mobility. Impossibility to redistribute from capital under perfect competition. Commodity taxation: origin vs. destination principle. The strategic advantage of being small. Tax exportation. Tax competition as remedy to dynamic inconsistency. Financing local public goods and public intermediate goods out of corporate income tax. Vertical tax externality and tax overlap. Estimating benefits from the corporate tax coordination in the EU.
MH 569-599
Brochner, J., Jensen, J., Svensson, P., Sorensen, P.B. (2007) The Dilemmas of Tax Coordination in the Enlarged European Union, CESifo Economic Studies, 53 (4), 561-595.
Devereux, M., Sorensen, P. B. (2005) The Corporate Income Tax: International Trends and Options for Fundamental Reforms. Paper prepared for the Working Party No. 2 of the Committee on Fiscal Affairs of the OECD. DG Economic and Financial Affairs, The European Commission
Hines, Jr., J. R, and Summers, L. H., (2009) How Globalization Affects Tax Design, NBER Working Paper No. 14664, January 2009
Wagner, W., Eijffinger, S., 2008, Efficiency of capital taxation in an open economy: tax competition versus tax exportation. International Tax and Public Finance 15 (6)
Wilson, J. D., Wildasin, D. E., 2004, Capital tax competition: bane or boon, Journal of Public Economics 88 (2004) 1065-1109.
c) Local public finance. Decentralization tradeoff in the provision of local public goods due to spillovers vs. heterogeneity. Oates? decentralization theorem. The tradeoff due to closeness vs. duplication. Excessive endogenous decentralization. Effective and ineffective yardstick competition. Spillovers, spill-ins and tax competition. Strategic spending competition. Tiebout sorting. Welfare shopping and when the poor chase the rich.
BI 299-322, 353-368; HM 543-558, 569-599
Besley, T. and Coate, S., 2009, Centralized versus decentralized provision of local public goods: a political economy approach, Journal of public economics, 87 (12), 2611-2637.
Oates, W. A. (2005) Toward A Second-Generation Theory of Fiscal Federalism, International Tax and Finance, 12, 349-373.
Oates, W. A. (2006) On the Theory and Practice of Fiscal Decentralization, IFIR Working Paper No. 2006-05
Ogawa, H., Wildasin, D.E., 2009, Think locally, act locally: spillovers, spillbacks, and efficient decentralized policymaking, American Economic Review 99:4, 1206-1217
Rubinfeld, D., The Economics of the Local Public Sector, Handbook of Public Economics, Vol. 2 (11), available as PDF
