Dr Daniel Reck and Prof Johannes Spinnewijn

This course is available on the Double Master of Public Administration (LSE-University of Toronto), MPA Dual Degree (LSE and Columbia), MPA Dual Degree (LSE and Hertie), MPA Dual Degree (LSE and NUS), MPA Dual Degree (LSE and Sciences Po), MPA Dual Degree (LSE and Tokyo), Master of Public Administration and Master of Public Policy. This course is available with permission as an outside option to students on other programmes where regulations permit.

Students must have taken PP440 Macro and Microeconomics (for Public Policy) or an equivalent course.

This is a course in theoretical and applied public economics using intermediate economic theory. Topics include: issues of equity and efficiency and alternative theories of the role of the state; models of public goods and externalities, including environmental policy; income inequality, poverty alleviation and the role of welfare programmes in theory and in practice; health and education policy; the effects of taxes and transfers on labour supply and government budgets; optimal taxation, tax evasion, and taxation in developing countries; and current topics in public finance. The main institutional references will be to the UK and the US, but some attention will also be given to broader international experience.

This course is delivered through a combination of classes and lectures totaling a minimum of 29 hours in the Lent Term, and a 1 hour review class in the Summer Term. This year teaching will be delivered through a combination of online lectures with classes taking place in person where possible and where conditions allow.

Students will complete and be given feedback on two sets of practice questions, which are similar in style and format to the final examination.  Students will also be given feedback on a draft introduction and outline of their policy essay.

J Gruber (2011) Public Finance and Public Policy, 3rd edition, Worth Publishers. [CC HJ141 G88] [or Gruber (2007), 2nd edition].

N Barr (2012), The Economics of the Welfare State, 5th ed., OUP [CC HB99.3 B26].  Institute for Fiscal Studies (2010-2011), Mirrlees Review: Reforming the Tax System for the 21st Century, Volume 1 (2010): Dimensions of Tax Design, Volume 2 (2011): Tax by Design. Oxford University Press, Oxford. Available online at: http://www.ifs.org.uk/mirrleesReview

On developments in public spending in the UK, see H Glennerster (2003), Understanding the finance of welfare (Policy Press); or H Glennerster and J Hills (eds) (1998), The State of Welfare: The economics of social spending (Oxford) [CC HV245 S79].

Students wishing to review their microeconomic theory should consult a textbook on intermediate microeconomic theory, such as Morgan, Katz and Rosen (2006) Microeconomics, McGraw Hill (CC HB172 M84) or J Perloff (2008) Microeconomics: Theory & applications with calculus, Pearson (CC HB172 P45).

On the structure of taxation in the UK, see IFS (2011) A Survey of the UK Tax System, Briefing Note no. 9 (http://www.ifs.org.uk/bns/bn09.pdf) and the HM Revenue and Customs website, (http://www.hmrc.gov.uk).  The Institute for Fiscal Studies is an independent policy research institute and its website (http://www.ifs.org.uk) has a wide range of useful publications. The HMRC website includes information on the tax structure and statistics on tax payments (by income group, by type of tax, etc.) and overall revenues raised.

The UK Treasury website (http://www.hm-treasury.gov.uk/) provides a range of documents on economic policies and the public finances, including the annual publication, Financial Statement and Budget Report (the ‘Red Book’), published each year on Budget Day.

For comparative international fiscal data, information and analysis, useful sources include the International Monetary Fund, IMF (http://www.imf.org/), the World Bank (http://www.worldbank.org/) and the Organisation for Economic Cooperation and Development, OECD  (http://www.oecd.org).

Exam (60%, duration: 3 hours, reading time: 15 minutes) in the summer exam period.
Essay (40%, 2000 words) in the ST.

The essay, of up to 2,000 words, will be on a policy question related to the course material.

Some departments have produced short videos to introduce their courses. Please refer to the course selection videos index page for further information.