pub econ lecture 01 intro
TRANSCRIPT
-
8/3/2019 Pub Econ Lecture 01 Intro
1/17
Public Finance Dr. Katie Sauer
-
8/3/2019 Pub Econ Lecture 01 Intro
2/17
Public Finance is the study of the role of government in
the economy:
When should the government intervene?
How might the government intervene?
Whatis the effect of the intervention?
Why do governments choose to intervene in the
way that they do?
-
8/3/2019 Pub Econ Lecture 01 Intro
3/17
There is disagreementamong economists on the extentto
which the government should intervene for these reasons.
When should the government
intervene in the economy?
make markets possible
- property rights
- sound currency
- deter fraud
redistribute wealthdeal with
market failures
- public goods
- externalities
-
8/3/2019 Pub Econ Lecture 01 Intro
4/17
The Measles Epidemic of 19891991
o vaccine introduced in 1963, by the 1980s cases were very rare
o 1989-1991 huge resurgence in cases
- due to low immunization rates among inner-city youths
- negative externality
o in early 1990s the federal government publically encouraged
parents to get children immunized
o federal government paid for vaccines for low-income families
o immunization rates rose to 90% by 1995 (had never been > 70%)
-
8/3/2019 Pub Econ Lecture 01 Intro
5/17
How might thegovernment
intervene?
Price Mechanisms
- taxes
- subsidies
Restrict or Mandate
Private Sales or Purchases
Public Provision of
Goods or Services Public Financing of
Private Provision
Regulation
-
8/3/2019 Pub Econ Lecture 01 Intro
6/17
What are the effects of the intervention?
Indirect Effects are those that arise only because individuals change
their behavior in response to the interventions.
Direct Effects are those that would be predicted
if individuals did not change their behavior in
response to the intervention.
-
8/3/2019 Pub Econ Lecture 01 Intro
7/17
Scenario: In order to make college more affordable for
students from families with fewer resources, a
government has proposed allowing the student of any
family with less than $50,000 in savings to attend apublic university for free.
Discuss the direct and indirect costs of this policy.
-
8/3/2019 Pub Econ Lecture 01 Intro
8/17
Why do governments do what they do?
Well need some of the tools from Political Economy to
answer this question.
The theory of how the political
process produces decisions thataffect individuals and the
economy.
-
8/3/2019 Pub Econ Lecture 01 Intro
9/17
Course Overview:
Basic Economic ToolsCh 2: Ch 3: Ch 4:
Theoretical Tools Empirical Tools Intro to Budgets
Addressing Market FailuresCh 5-6 Externalities
Ch 7-9 Public GoodsCh 10 State / Local Govt
Ch 11 Education
RedistributionCh 12-14 Social Insurance
Ch 15-16 Health InsuranceCh 17 Income Distribution
TaxesCh 18 intro
Ch 19-20 implications
Ch 21-23 taxes on individuals
Ch 24 corporate taxes
Ch 25 tax reform
Exam
1
Exam
2
Exam
3
-
8/3/2019 Pub Econ Lecture 01 Intro
10/17
-
8/3/2019 Pub Econ Lecture 01 Intro
11/17
-
8/3/2019 Pub Econ Lecture 01 Intro
12/17
-
8/3/2019 Pub Econ Lecture 01 Intro
13/17
-
8/3/2019 Pub Econ Lecture 01 Intro
14/17
-
8/3/2019 Pub Econ Lecture 01 Intro
15/17
-
8/3/2019 Pub Econ Lecture 01 Intro
16/17
-
8/3/2019 Pub Econ Lecture 01 Intro
17/17