University
of Wisconsin-Madison, Department of Economics
Economics 741: Public
Economics
Spring 2007
http://www.ssc.wisc.edu/~mbrown/741.htm
Prof.
Meta Brown Lectures
MW
Office:
7442 Social Science 6102
Social Science
Hours:
TR 12:
Phone:
262-8789
Email:
mbrown@ssc.wisc.edu
Economics
741 studies the literature on the effects of government taxes, expenditures,
and mandates on the decision-making of individuals, families, and firms, with
emphasis on both applied theory and empirics.
Students will gain familiarity with the Public Economics literature and
some knowledge of topics of current relevance in the field, with the goal of
developing independent research programs.
The
reading list offers an introduction to the literature on each of the nine
topics addressed in the syllabus.
Required readings are marked with **, and strongly recommended readings
are marked with *. Many additional sources are listed for students who identify
topics of particular interest.
PROBLEM
SETS (20%): Approximately three problem
sets will be assigned during the semester.
These will be collected and graded.
Group work is permitted, and one problem set may be submitted by three
or fewer group members. Some problems
will require use of STATA and GAUSS. This software is available to students in the
third floor lab. Take special care to understand all solutions to problem sets,
as this will be important preparation for the final exam.
PRESENTATION
(20%): During two weeks in the second
half of the semester, each class member will make a presentation of roughly 30
minutes on a topic of her choosing.
Presentations will involve overviews of the literature on the student’s
topic, which must relate to government activities and their influence on
individual or firm-level decisions. It
is intended that these literature surveys support students’ field paper
research. Students will be expected to
provide written notes to accompany presentations, and the final exam will
include questions drawn from the information in some of the student
presentations.
FINAL
EXAM (60%): There will be an in-class,
open-note final examination during the examination period. The date of the exam will be determined by
the class later in the semester.
The
syllabus, problem sets and some rough lecture notes will be posted on the class
web site, which you can link to from www.ssc.wisc.edu/~mbrown/741.htm.
Students
in the public economics field must submit a field paper by August 2007. Public economics field advisors are Jane
Cooley, Karl Scholz, Bobbi Wolfe, and me. If you intend to submit a paper to
the public field and you have not yet identified a public faculty member to
advise your paper, please do so as soon as possible.
AER American Economic Review EMA Econometrica JEP Journal of Economic Perspectives JPE Journal of Political Economy NTJ National Tax Journal BPEA Brookings Papers on Economic Activity JEL Journal of Economic Literature JHR Journal of Human Resources JPubE Journal of Public Economics QJE Quarterly Journal of Economics
Tax
Incidence
**
Kotlikoff,
L. and L. Summers, “Tax Incidence,” Handbook of Public Economics, v2,
1987.
Cutler,
D.,“Tax Reform and the Stock Market: An Asset Price Approach,” AER December
1988 1107-1117.
Atkinson,
A. B. and J. E. Stiglitz, Lecture on Public Economics, Mcgraw Hill 1980,
Diamond, P.,“Tax Incidence in a Two-Good Model,” JPubE
1978.
Harberger, A.,“The Incidence of the Corporate Income
Tax,” JPE June 1962.
Lang, M. H. and D. Shackleford, “Capitalization of
Capital Gains Taxes: Evidence from Stock Price Reactions to the 1997 Rate
reduction,” JPubE April 2000, 69-85.
McClure, C. “General Equilibrium Incidence Analysis: The
Harberger Model After 10 Years,” JPubE February 1975.
Life Cycle Incidence
**
Poterba,
J. “Lifetime Incidence and the Distributional Burden of Excise Taxes,” AER 79
(May 1989), 325-330.
Mandate
Incidence
** Summers, L., “Some
Simple Economics of Mandated Benefits,” AER May 1989, 177-189.
**
Gruber, J. “The Incidence of Mandated Maternity Benefits,” AER June 1994,
622-641.
Gruber,
J. and A. Krueger, “The Incidence of Mandated Employer-Provided Insurance:
Lessons from Workers’ Compensation Insurance,” Tax Policy and the Economy,
D.
Government-induced
irregularities in the budget constraint, individual decision-making and estimation issues
** Moffitt, Robert, “The Econometrics of Kinked Budget
Constraints,” JEP Spring 1990 119-139.
Blomquist, S., M. Eklof and
* Blundell, R., A. Duncan and C. Meghir, “Estimating labor
Supply Responses Using Tax Reforms,” EMA 66 (1998), 827-862.
Bosworth, B. and G. Burtless, “Effects of Tax Reform on
Labor Supply, Investment and Saving,” JEP 6 (1992), 3-25.
Hausman, J., “Labor Supply,” in How Taxes Affect
Economic Behavior, H. Aaron and J. Pechman (eds), Washington: Brookings,
1981.
Hausman, J., “The Econometrics of Nonlinear Budget Sets,”
EMA November 1985.
Hausman, J. and J. Poterba, “Household Behavior and the
tax Reform Act of 1986,” JEP 1 (1987), 101-119.
Heckman, J., “Comment,” in Feldstein (ed) Behavioral
Simulations in Tax Policy Analysis (
MaCurdy, T., “Work Disincentive Effects of Taxes: A
Reexamination of Some Evidence,” AER 80 (1992), 243-249.
MaCurdy, T., D. Green and H. Paarsch, “Assessing
Empirical Approaches for Analyzing Taxes and Labor Supply,” JHR Summer 1990.
Mroz, T., “The Sensitivity of an Empirical Model of
Married Women’s Hours of Work to Economic and Statistical Assumptions,” EMA
July 1987, 765-800.
Ziliak, J. and T. Kniesner, “Estimating Life Cycle Labor
Supply Tax Effects,” JPE, April 1999, 326-359.
Married
Earners
** Eissa, N., “Taxation and the Labor Supply of Married Women:
The Tax Reform Act of 1986 as a Natural Experiment,” NBER Working Paper 5023,
1995.
Dickert-Conlin,
S. and S. Houser, "The EITC and Marriage," NTJ 55, 25-40, March 2002.
Dickert-Conlin, S. and S. Houser, "Taxes and Transfers: A New Look at the Marriage Penalty," NTJ 51(2), 175-218, 1998.
Eissa, N. and
H. Hoynes, “Taxes and The
Labor Market Participation of Married Couples: The Earned Income Tax Credit,” JPubE, vol88, August, 2004,
pp1931-1958.
Cullen,
J. B. and J. Gruber, “Spousal Labor Supply as Insurance: Does Unemployment
Insurance Crowd Out the Added Worker Effect?” NBER Working Paper 5608, 1996,
and JOLE 2000.
Dickert-Conlin, S., "Taxes and Transfers: their Effect on the
Decision to End a marriage." JPubE 73(2) 1999, 217-240.
Gravelle,
J. G., “Equity Effects of the Tax Reform Act of 1986,” (in Symposia: Tax Reform
Act of 1986) JEP 6(1) (1992), 27-44.
Hoynes,
H. W., “Welfare Transfers in Two-Parent Families: Labor Supply and Welfare
Participation Under AFDC-UP,” EMA, March 1996, 295-332.
**
Samuelson, Paul A., “The Pure Theory of Public Expenditure,” Review of Economics and Statistics, Nov. 1954,
387-389.
** Bergstrom, Theodore, Laurence Blume and Hal Varian, “On the Private
Provision of Public Goods,” Journal of Public Economics, 1986, v 29,
25--49.
** Andreoni, James, “Privately Provided Public Goods in a Large
Economy: The Limits of Altruism,” Journal
of Public Economics, February 1988, v 35, 57--73.
Andreoni,
James, “Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow
Giving,” Economic Journal, 100, 1990.
Andreoni,
James and Ted Bergstrom, “Do Government Subsidies Increase the Private Supply
of Public Goods?” Public Choice, v. 88, 1996, 295-308.
Andreoni,
James, “Giving with Impure Altruism:
Applications to Charity and Ricardian Equivalence,” Journal of
Political Economy, December, 1989, 1447--1458Becker, G., “A Theory of
Social Interactions,” Journal of Political Economy, 1974.
Bernheim,
B. D., “On the Voluntary and Involuntary
Provision of Public Goods,” American Economic Review, 1986.
.
Lindahl,
E., “Just Taxation --- A Positive Solution,” in Musgrave and Peacock, ed., Classics
in the Theory of Public Finance, Macmillian, 1958, 168--176.
Samuelson,
Paul A., “Diagrammatic Exposition of a Theory of Public Expenditures,” Review
of Economics and Statistics, 1955, 350--356.
Samuelson,
Paul A., “Pure Theory of Public Expenditure and Taxation,” in Margolis and
Guitton, eds., Public Economics, Macmillian, 1969, 492--517.
Varian,
Hal R., “Sequential Provision of Public Goods,” Journal of Public Economics,
1994, 53, 165--86.
Warr,
Peter, “Pareto Optimal Redistribution and Private Charity,” Journal of
Public Economics, 1982.
Laffont,
Chapter 2.1 -- 2.4, 2.7
Cornes
and Sandler, Chapter 6, 7, 8
Experimental
studies:
Ledyard,
J., “Public Goods: A Survey of Experimental Research,” in J. H. Kagel &
A.E. Roth, eds., Handbook of Experimental
Economics,
Andreoni,
J., “Cooperation in Public Goods Experiments: Kindness or Confusion?” AER
September 1995, 85, 891-904.
Andreoni,
J. and L. Vesterlund, “Which is the Fair Sex? Gender Differences in Altruism,”
QJE, February 2001.
Andreoni,
J. and Ragan Petrie, “Public Goods Experiments Without Confidentiality: A Glimpse
Into Fund0Raising,” JPubE, 88(7-8), 2004, 1605-1623.
IV. Externalities
**
Cornes and Sandler, Chapters 3 and 4, on Externalities.
**
Andreoni, James, and Arik Levinson, “The Simple Analytics of the
Environmental
Kuznets Curve,” Journal of Public Economics, v 80, 2001, 269-286.
Bovenberg,
A. Lans, and Ruud A. de Mooij, “Environmental Levies and Distortionary
Taxation,” American Economic Review, September 1994, 1085--1089.
Coase,
R., “The Problem of Social Cost,” Journal of Law and Economics, 1960,
1--44.
Dixit, Avinash and Mancur
Olson, “Does Voluntary Participation Undermine the Coase Theorem?” Journal
of Public Economics, June 2000, 309-336.
Ebrill,
L. and Steve Slutsky, “Time, Congestion and Public Goods,” Journal of Public Economics, 1982,
307--335.
Harden,
Garret, “The Tragedy of the Commons,” Science, 1968, December.
** Mandatory notes will be distributed on
this subject. They draw heavily on notes from W. van der Klaauw and the
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J.J. and R. Robb, “Alternative Methods for Evaluating the Impact of
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