UNIVERSITY OF SOUTHERN INDIANA

                              DEPARTMENT OF ECONOMICS AND FINANCE

                                 ECON 331 – PUBLIC FINANCE/ECONOMICS

                                      DR. CASHEL-CORDO   SPRING 2008

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TEXT:  Public Finance and Public Policy, 2^nd Edition, Jonathan Gruber, Worth, 2007

Companion Website

Assorted scholarly and current event articles found in the readings list below.  Additional articles will be posted as events unfold over the course of the semester.

COURSE CONTENT:  Public Finance deals with the microeconomic rationales for the existence of government.  Government involvement in the economy has two basic objectives, to increase economic efficiency by addressing market failures and to increase the equitable distribution of income. Public Finance examines government expenditure and taxation policy in achieving these goals.  This requires a combination of both positive and normative analyses.  Normative analysis examines the social contract between a democratic government and a nation’s citizens in determining the relative weights given to the goals of efficiency versus equity. Positive analysis examines the effects of particular policies with respect to effect on efficiency and equity.   

COURSE OBJECTIVES:  Ultimately, the main objective of this course is for the student to be able to apply economic concepts to the discussion and understanding of the topics to be studied in the course. In order to achieve this objective there are two intermediate goals. 

The first is that the student understands and can apply the relevant economic theory underlying those concepts.  Students enrolled in this course have a range of exposure and understanding of economic theory.  At a minimum, students are expected to have taken both principles of economics courses.  Many students will have taken Intermediate Microeconomics as well as other upper division economics courses.   After the course introduction we will build our economic toolkit (theory) to accomplish the first goal of the course. We will then apply these concepts as necessary in the learning of Public Finance topics. 

The second goal of the course is that student is able to apply economic reasoning to current Public Finance events.   As different topics/issues are covered, on-line readings dealing with those topics/issues will be assigned.  By the end of the course students should know and be able to apply economic reasoning to current Public Finance issues.

COLLEGE OF BUSINESS SKILL DEVELOPMENT:  Consistent with the college’s goal that students develop basic skills, this course will assess two of these skills: analytical problem solving and written communication.  The former will be addressed by the application of relevant economic theory in explaining various public finance topics.  The latter, written communication will be assessed using the final draft of the required research paper (see below).

PREREQUISITES: Principles of Micro and Macro Economics (ECON 208 and ECON 209)

COURSE REQUIREMENTS 

EXAMS:  There will be two midterms and a final exam.  The exams are scheduled for weeks six and twelve on Thursday.  The exams= format will consist of some combination of problems, short answer and/or essay questions.  Make-up exams are discouraged, but possible under extraordinary circumstances.  It is the student’s responsibility to inform me BEFORE the exam and be able to provide written documentation should there be a question of the circumstances.

QUIZZES:  The instructor retains the right to give unannounced quizzes.  They are to be implemented when the instructor determines that students are not fulfilling their reading responsibilities and are not prepared for lecture.

RESEARCH PAPER:  Each student will be required to write a research paper on a topic dealing with public finance of his or her own choosing.  It is to be typed with standard formatting, i.e., double spaced, one inch margins, 12 point font size, etc. A bibliographic reference is to be included with standard and consistent formatting. The paper should be between 8 and 10 pages in length.  You may choose any topic related to public finance. Remember that public finance involves government expenditure and taxes. In this course we will focus on the federal government level.

Example topics include the following:
               Flat tax versus progressive taxation                    Social security privatization
               Reforms to Medicare and Medicaid                     Budget deficits and national debt
               Prescription drug benefits                                     Welfare reform

Your paper should be well-written with a coherent structure demonstrating that you gave considerable thought to how you are going to present your topic.  There should be subheadings within the paper based on the outline that you turned in earlier in the semester.  The paper should present a background of the topic and discuss alternative points of view.  You are expected to use what you have learned in class to analyze the issue and your paper should have a conclusion that describes your own position regarding that issue.

Timeline:  A proposal that describes your topic and demonstrates your research efforts to date will be due the third week of class.  An annotated bibliography will be due the seventh week of class.  Each citation should include a two to three paragraph description of the article in question.  A first draft of the paper is due the tenth week of class and the final draft will be due the fourteenth.

 Grading:  The research assignment grade will be determined in the following manner. The final draft will constitute 70% of the total grade, with a 0.7 weight for the quality of research and 0.3 weight on the presentation of your written work.  Each of the intermediate steps (paper proposal, annotated bibliography, and first draft) will constitute 10% of the grade and will be evaluated on the basis of the effort put into doing quality and timely work.

INTERESTING LINKS:  To help you get started here are a few interesting websites with Public Finance content.  This list is subject to growth, recommendations for additions are welcomed.

 ACADEMIC HONESTY:  Academic dishonesty, in particular plagiarism (submitting another person's work, in whole or in part, as your own), or cheating on quizzes or exams will not be tolerated.  Students will be subject to disciplinary action as outlined in the Student Rights and Responsibilities section of the 2007-2009 USI Bulletin.  If found guilty, the student will receive an "F" in the course and potentially be dismissed from the University.

Your grade in the course will be determined by the weights in the table to the left.  In essence you will receive four grades in this class with each carrying an equal weight in determining your final grade.  The research assignment grading is discussed above.

READING ASSIGNMENTS:  We will attempt to sequentially follow the following reading list, a most ambitious agenda with the likelihood, given past experience, that at some point we will have to pick and choose which remaining topics to forgo.  Online readings will be posted at regular intervals with sufficient time for students to complete their reading assignments.  The semester is divided into 15 weeks and readings are assigned on that basis.   By coming to class regularly you will be able to determine exactly which readings are to be covered in the next class.   Any deviation in reading assignments will be announced at the appropriate time in class.  The student is required to read the appropriate chapters and any other assigned readings PRIOR to its being covered in class.