Public Finance Theory

obligatory courses

(in Polish) Brak szczegółowych (tzn. wiedza i umiejętności konieczne do osiągnięcia zakładanych efektów uczenia się, są tożsame z zakładanym profilem studentów przyjętych na studia II stopnia kierunku ESP)

The aim of the course is presentation of problems related with assigment, realization and interpretation of public sector activity at central and local level. The course will give the knowledge about: structure and corelation in public finance, evaluation methods for effects of public sector spending and programs, sources of financing (taxes, charges, debt instruments, transfers).

The course is planned as lecture with case studies.

Assessment is based on written examination plus extra points for preparation and presentation of case studies and active participation in classes.

1. Public sector in an economy. The function and the role of public sector. Public sector in Poland and other countries

2. The function and the role of public sector. Ineffectiveness of the market. Justice as economical category

3. Public choice. The function and the role of public sector. Public Production and Bureaucracy

4. Public sector growth. Structure of public spending in Poland, international comparisons of public expenditure composition

5. Analysis of public spending. Effects of public programs, costs and benefits for individuals and society

6.-7 Functions of the welfare state. Education, pension programs, health care, etc.

8. The purposes and aspects of decentralization. Economic function of local and state government. Exit&voice as a method of revealing preferences. Tiebout thesis.

9. Revenue assignment problems. Economic function of local finance. Rules and types of local revenues. Definition and causes of fiscal stress. The structure of local revenues in Europe. The economics of local taxation

10. Case study- local tax in practice.

11. Intergovernmental grants. Rationale for grants. Typology of grants. Economic effects of grants and median voter model. Special problems- flypaper effect, budget maximizing, public choice. Granting European local governments- analysis of structure and purposes.

12. Case study – intergovernmental grants

13. Pricing of public goods- economics of charges.

14. Public debt and public deficit. Management of public debt.

15. Local government borrowing. Economics of local debt. Case study in local government creditworthiness

J. Stiglitz; Ekonomia sektora publicznego; PWN; Warszawa 2004 (selected chapters)

St. Owsiak; Finanse publiczne. Teoria i praktyka; PWN; Warszawa 2006 (selected chapters)

Bailey SJ; Local government economics. Principles and practice; MacMillan 1999 r. (selected chapters)

Papers and repots on OECD Fiscal Federalism Network web site

Cognizance

The student has an extended knowledge of the theory of public finance, including opinions about the role of the public sector and its historical evolution and the role of economics, political science and sociology, and law within the meaning of these finances. He knows and understands the functions of public finance and its sectors-government, local government and social security and interdependence between them. The student knows the reasons of inefficiency of private and public, and understand the relationships between these entities. He has knowledge on the systems of standards and regulations conditioning the functioning of public sector entities. The student has a thorough knowledge of the processes of change in the public sector, including in particular the decentralization. He knows the methods and tools for the optimal size of government, the division of tasks between levels of government, the scope of the fiscal powers of local governments and ways of financing local governments through a system of transfers (grants and subsidies) as well as fees from residents. The student has a thorough knowledge about the problem of debt and public deficit, knows and understands the standards and rules for shaping it (especially at the state and local governments) and has detailed knowledge of the evolution of concepts of the role of public debt and deficit in the economy ((S2A_W01; S2A_W02; S2A_W03; S2A_W04; S2AW06; S2A_W07; S2A_W08; S2A_W09)

Expertise

Student is able to evaluate the effects of public spending, particularly assistance programs (grants and subsidies) and basic cost-benefit analysis. Students can evaluate the government's tax policy, the impact of the transfers on the finances of local governments and government assess the creditworthiness of local authorities. Student is able to plan and carry out research in the field of public finance and local finance in particular, using properly chosen model -the median voter model or model of politicians preferences. Student is able to interpret, explain and analyze the causes of public sector growth, the so-called. Fly-paper effect, the budget cycle. Students can prepare a written development and an oral presentation showing the results of its analytical work, for cases (a local tax policy, the transfer system, credit rating)

(S2A_U1; S2A_U02; S2A_U03; S2A_U05; S2A_U06; S2A_U07; S2A_U08; S1A_U09; S1A_U10)

Skills

The student is aware of the continuing evolution of the public sector and the need to constantly refill the knowledge and skills in this sector, realizing the interdisciplinary dimension of this knowledge (in particular in the field of law and administration, political science, sociology). Student demonstrates willingness for cooperation and teamwork (through the preparation of case studies and taking part in the experiment). The student is aware of the multidimensional impact of public and private engagements.

(S2A_K01; S2A_K02; S2_K03; S2_K05; S2_K06)

1) writen exam

2) additional points for case studies

3) the extra points for experiments (planned on one of first meetings)