Public Finance: Econ 342

Department of Economics, Vassar College

Professor: Robert Rebelein

Office: 247 Blodgett Hall
Office Hours: TBA
Email: rebelein@vassar.edu
Phone: 845-437-7393 (email is MUCH better)

Course Description:
Governments wield considerable influence in modern economies: they collect taxes, impose
regulations, provide an assortment of services and purchase large amounts of goods and services. In
some cases, the economic effects of government policies are fairly obvious; in other cases, the
economic effects can be far-reaching and unexpected. There is considerable ongoing debate in the
U.S. (and other countries) about how extensively a government should be involved in the workings of
its economy. Some suggest such involvement is necessary for a smoothly functioning economy, while
others argue exactly the opposite.

In this course we will explore several key issues in this debate by examining the justifications for,
and the economic effects of, an assortment of government taxation and expenditure programs. Of
special interest is the effects these programs have on individual consumption and labor supply
decisions, and any other behavioral incentives – intended or unintended – they may
produce. Prominent in our work will be the development of economic models appropriate to studying
the various government policies. These models will generally build on the basic utility maximization
model introduced in your Microeconomic Theory course.

Textbook:
The primary text for this course is “Public Finance: A Contemporary Application of Theory to
Policy,” 11th Edition (2013) by David N. Hyman. Additional readings will be given as the semester
progresses; typically, these will be made available via Moodle. In addition, you are encouraged to pay
attention to relevant articles in the popular press.

Prerequisite:
It will be difficult for you to succeed in this course without a firm grasp of the utility-
maximization problem analyzed in Microeconomic Theory (Econ 201). Knowledge of basic calculus
(i.e., how to take derivatives) is required.

Grading:
Your grade for this course will be determined by your performance on homework assignments, a
research project, a midterm exam and a final exam. These will be weighted with the following
percentages:

Homework 20%
Research Project 25%
Midterm Exam 25%
Final Exam 30%

1
Homework will be primarily quantitative problem sets. The answers generally will be made available
on Moodle on the day the homework is due. It is important for you to have your work done before
coming to class. Late papers are seldom accepted, especially not without an exceptional excuse. If
you know you will be absent on a particular day, either deliver your assignment to me yourself (via
email or hard copy) or arrange to have a friend turn in your assignment before class.
I encourage you to talk with each other about the homework problems because this is the best way to
learn. However, you must write up your answers independently if you expect to receive full credit for
them. All homework must be typed or written very clearly. Tables, graphs and equations should be
drawn neatly and labeled clearly.

For the Research Project, each student will research a particular public finance policy issue (largely
of their own choosing) and prepare a written report of their findings. Additional information on this
project will be distributed during the first two weeks of class.

The midterm exam is tentatively scheduled for the week before spring break. If you miss the
midterm exam for any reason the weight of your final exam will be increased by 25%.

The final exam will be a take-home exam administered during the early part of the final exam period.
The final exam will be cumulative. Additional details will be announced near the end of the semester.

Plagiarism: Plagiarism is a very serious offense and will be dealt with severely; penalties can be as
harsh as receiving an F for the course. Merriam-Webster’s Online Dictionary defines “plagiarize” as
“to steal and pass off (the ideas or words of another) as one's own; use (another's production) without
crediting the source; to commit literary theft; present as new and original an idea or product derived
from an existing source.” The Student Handbook gives specific information about Vassar’s Academic
Integrity Policy.

Students are responsible for knowing and adhering to the policies published in the course catalogue
and the student handbook.

Students are encouraged to pay attention to popular press and internet news articles pertinent to the
course topics and should check the course Moodle site regularly for information relevant to the course.

Academic accommodations are available for students with disabilities who are registered with the
Office of Disability and Support Services. Students in need of disability accommodations should
schedule an appointment with me early in the semester to discuss any accommodations for this course
that have been approved by Office of Disability and Support Services, as indicated in your DSS
accommodation letter.

The primary format for this class will be lecture. However, classroom discussions will occur regularly
so please come to class prepared to discuss assigned readings and homeworks.