The invisible hand and externalities american economic review

Draft, August 27, 2013

University of Nevada, Reno
Department of Economics

Office: AB318D
Phone:
Email:
Homep Office Houent.

Course Description: This is a graduate level public finance course. The goal is to introduce students to public finance and provide them with the theory and some empirical evidence on the expenditure and taxation functions of the government.

5.Acquaint students with some of the empirical research related to taxation and government expenditure.

Students with Disability: If you have a disability and will be requiring assistance, please contact me or the Disability Resource Center (Thompson Building Suite 101) as soon as possible to arrange for appropriate accommodations.

Draft, August 27, 2013

Bruce, N. 2001. Public Finance and the American Economy, Second Edition. New York, NY: Addison, Wesley.

Cordes, J.J., R.D. Ebel and J.G. Gravelle. 2005. The Encyclopedia of Taxation and Tax Policy, Second Edition. Washington, D.C.: The Urban Institute Press.

Quigley, J.M. and E. Smolensky. 1994. Modern Public Finance, Cambridge: Harvard University Press.

Rosen, H. S. and Ted Gayer. 2010. Public Finance (9th Edition). Boston: Irwin McGraw-Hill.

Draft, August 27, 2013

Auerbach, Alan J. and Martin S. Feldstein. 1985. Handbook of Public Economics, Volume 1 and 2, Amsterdam: North Holland.

Cornes, Richard and Todd Sandler. 1996. The Theory of Externalities, Public Goods and Club Goods. Second Edition. New York: Cambridge University Press.

Myles, Gareth D. 1995. Public Economics, Cambridge, MA: Cambridge University Press.

Grading: The course grade is based on two problem sets (5% each), policy exercise (5%), a midterm exam (25%), a comprehensive final exam (30%), and a research paper (30%). Final exam is currently scheduled on Monday, December 16, 2013, 5:00 – 7:00 pm. Attendance to all class sessions is mandatory. This course uses a +/- scale for grading.

Draft, August 27, 2013

You can discuss these with me during my office hours. You will then choose one of these ideas as a research project for this semester.

Internet Information: Some of the papers in the reading list have hyperlinks to electronic copies through JSTOR, NBER and IZA databases and other publicly available journals such as National Tax Journal. On your electronic copy of the syllabus, you can click on links to have access to these papers in pdf. Another good online database to find working papers and published papePapers in Economics (RePEc) which could be accessed through

Academic Integrity:Honesty and personal integrity are key facets of the University of Nevada community. The issue of academic integrity is taken very seriously at the University and College of Business Administration. Since the majority of students take pride in total academic integrity, it is hoped that you, as a student, will take action to influence the practice of integrity in academic community. I understand that students feel pressure to perform well in their classes, and I will do
everything that I can to ensure that you have the resources necessary to succeed.

Outline of Topics and Readings:

1. Introduction and Review of Welfare Economics

Musgrave, Richard A. and Peggy B. Musgrave. 1980. Public Finance in Theory and Practice, New York: McGraw-Hill. Chapter 1.

*Poterba, James M. 1998. “” National Tax Journal, 51 (2): 391-396.

Oakland, W. 1987. “Theory of Public Goods.” Chapter 9, Handbook of Public Economics, Vol. 2, pp. 485-535.

*Samuelson, P.A. 1954. “” Review of Economics and Statistics,

3. Externalities

Background: Tresch (2008), Chapters 6 and 7; Tresch (2002), Chapter 5

Fullerton, D. and A. Wolverton. 2005. “The Two-Part Instrument in a Second-Best World” Journal of Public Economics 89: 1961-1975.

*Fullerton, D. and A. Wolverton. 1999. “ Presumptive Tax and Performance Subsid” in nagaria, P. Portney and R. Schwab, eds., Cheltenham, UK: Edward Elgar: 32-57. Available as NBER paper 5993.

Wiggins, S. and G. Libecap. 1985. “ ”

Background: Tresch (2008), Chapter 15

Auerbach, Alan J. and James R. Hines. 2001. “” NBER Working Paper No. 8181.
Also in Handbook of Public Econland.

Harberger, Arnold C. “ ” Jo

*Hausman, J.A. 1981. “” American Economic Review, 71 (4)

MIDTERM EXAM – OCTOBER 17, 2013

*Slemrod, J. 1990. “” Journal of
Economic Perspectiv
*Smith, P. 1991. “” National Tax Journal, 44 (4): 421-436.

Stern, Nicholas H. 1976. “On the Specification of Models of Optimum Income Taxation,” Journal of Public Economics 6 (1): 123-162.

6. Tax Incidence

Background: Tresch (2008), Chapters 18 and 19

Fullerton, D. and G.E. Metcalf. 2002. “” NBER working paper 8829.

Goolsbee, A. 2000. “In a World Without Borders: The Impact of Taxes on Internet Commerce,” Quarterly Journal of Economics, 115 (2): 561-576.

*Harberger, A.C. 1962. “” Journal of Political Economy, 70 (3)

Mclure, C. 1975. “General Equilibrium Incidence Analysis,” Journal of Public Economics, February.

Draft, August 27, 2013

Barthold, Thomas A. 1993. “” National Tax Journal 46 (3): 291-299.

*Poterba, James M. 1989. “” American Economic Review, 79 (2): 325-330.

Tresch (2002), Chapter 17, 606-621.

Joint Committee on Taxation. 1993. Methodology and Issues in Measuring Changes in the Distribution of Tax Burdens, June 14, Washington: U.S. Government Printing Office.

McLure, C.E., 1967. “The Interstate Exporting of State and Local Taxes: Estimates for 1962”, National Tax Journal, 20 (1): 49-77.

Draft, August 27, 2013

Brookings Institution.

Yakovlev, Pavel, Mehmet S. Tosun and Arzu Sen. 2007. “ .” WV Public Finance Program Speci

6.5. Open Economy Tax Incidence

7. Taxation and Labor Supply

Background: Gruber, Chapter 21

Draft, August 27, 2013

Feldstein, M. 1995. “ ”

Moffitt, R. 1990. “” Journal of Economic Perspect

” 50 /www.nber.org/papers/w15012

Auerbach, A.J. and J. Slemrod. 1997. “ ” Journal of Economic Literatu

Boskin, M. J. 1978. “” Journal of Political Economy, 86 (2) part

Draft, August 27, 2013

*Summers, L.H. 1981. “” American Economic Revi

8.3. Capital Gains

*Auten, G. and J. Cordes. 1991. “” Journal of Economic Perspectives, Winter, pp

Barro, R. 1974. “” Journal Political Economy, 82 (6): 1095-1117

*Feldstein, M. 1974. “ ” Journa

International Monetary Fund. 20 Economic Outlook, September. The anan global aging can be downloaded from the IMF web site

Leimer, D.R. and S.D. Lesnoy. 1982. “ ” Journal of Poli

9.1. Taxation and Firm Investment

Auerbach, A. 1983. “” Journal of Economic

Hayashi, F. 1982. “ ” Eco

*Summers, L.H. 1981. “Taxation and Corporate Investment: A q Theory Approach,” Brookings Papers on Economic Activity, 1: 67-127.

” NBER Working Paper No. 7433,

Mackie-Mason, J. 1990. “” Journal of Finance, 45: 1471-1494

Background: Tresch (2008), pp. 423-455.

Akai, Nobuo and M. Sakata. 2002. “Fiscal Decentralization Contributed to Economic Growth: Evidence from State-Level Cross-Section Data for the United States,” Journal of Urban Economics, 52: 93-108.

McLure, Charles E. 2001. “The Tax Assignment Problem: Ruminations on How Theory and Practice Depend on History,” National Tax Journal 54 (2): 339-364.

Oates, Wallace E. 2005. “Toward a Second-Generation Theory of Fiscal Federalism,” International Tax and Public Finance, 12: 349-373.

Panizza, Ugo. 1999. ”On the Determinants of Fiscal Centralization: Theory and Evidence,” Journal of Public Economics 74: 97-139.

Stansel, Dean. 2005. “Local decentralization and Local Economic Growth: A Cross-Sectional Examination of US Metropolitan Areas,” Journal of Urban Economics, 57: 55-72.

Background: Tresch (2008), pp. 475-481.

Baron, J. and E.J. McCaffery. 2006. “Masking Redistribution (or it’s Absence),” in Behavioral Public Finance, E.J. McCaffery and J. Slemrod, eds., New York: Russell Sage Foundation.

Draft, August 27, 2013

* Finkelstein, May. 2009. “E-ZTax: Tax Salience and Tax Rates,” Quarterly Journal of Economics 124 (3): 969-1010.