Public Economies

Vrije Universiteit Amsterdam

Course Description

  • Course Name

    Public Economies

  • Host University

    Vrije Universiteit Amsterdam

  • Location

    Amsterdam, The Netherlands

  • Area of Study


  • Language Level

    Taught In English

  • Prerequisites

    Microeconomics I, Quantitative Research Methods I

  • Course Level Recommendations


    ISA offers course level recommendations in an effort to facilitate the determination of course levels by credential evaluators.We advice each institution to have their own credentials evaluator make the final decision regrading course levels.

    Hours & Credits

  • ECTS Credits

  • Recommended U.S. Semester Credits
  • Recommended U.S. Quarter Units
  • Overview

    The objective of this course is to identify, justify, analyze and evaluate public economic policy options (Bridging Theory and Practice - Knowledge and Application). Using problem sets and exercises, along with work on economic data will increase and deepen understanding.

    Upon completion of the course:
    (i) Students understand theoretical underpinnings, mechanisms, and functioning of policy tools in public economics, and they appreciate empirical dimensions of government involvement and policy (Bridging Theory and Practice - Knowledge).
    (ii) Students possess the relevant skills and master the choice and use of appropriate empirical and modeling tools to address important public economics questions in stylized and real-life cases and applications (Academic and Research Skills).
    (iii) Students are able to positively assess and normatively evaluate efficacy, effectiveness, equity, and efficiency of alternative economic policy measures in light of set objectives and relative to desirable social goals (Bridging Theory and Practice - Application).

    Public economics (public finance) is concerned with the role of the public sector (and in particular the government) in a market economy. This course covers an array of topics central to economic policy making, and will discuss underlying economic theory, but also embed it in the context of empirical research on policy evaluation that has given new impetus to public economic thinking.

    Classic topics include the correction of market failure in the presence of public goods (judicial system or national defence), as well as distributional goals with which welfare state institutions are concerned. We discuss welfare implications of taxation of incomes, consumption, or wealth, implied by adverse incentive effects on economic behavior. The central trade-off in public finance is that between the dual goals of efficiency and equity, and we argue that government policy is at most second-best relative to the goal overall maximization of social welfare. The course will also reflect on behavioral public finance aspects that point to limitations and challenges for economic policy making when citizens are boundedly rational and may not react as desired to public interventions. There may be a role for the government as choice architect.

    Problems triggered by asymmetric information constitute another central aspect of modern public finance, and accordingly tools will be applied to issues in social insurance design. In addition, the course will discuss issues of public choice and political economy when discussing strategic lobbying and rent-seeking, or institutional structures that reflect the provision of local and interjurisdictional public goods (fiscal federalism). We close with aspects of international taxation (tax avoidance, evasion, and tax competition).

    During the course both theoretical and empirical economic work in policy context is discussed.

    Lectures (including guest lecture(s)).

    25% tutorial assignments and problem sets - group assessment; 75 % written exam - individual assessment, Stipulations apply (see course

    Macroeconomics I and II. Students benefit strongly from participating in the parallel course Microeconomics II.

Course Disclaimer

Courses and course hours of instruction are subject to change.

Some courses may require additional fees.