Professor: Cielo D. Magno

Course Description
This course introduces the basic concepts and tools of analysis in public economics. It discusses the role of the public sector and discusses concepts such as state intervention, market failures, and the distribution of goods. It also covers taxation and the generation of wealth, government expenditures, fiscal balance, and deficit financing. It will cover intergovernmental fiscal relations and decentralization. It will also cover the role of the private sector in the provision of public goods.

References
Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector. New York: WW Norton & Co. [Print copy only]
Musgrave, R. A., & Peacock, A. T. (Eds.). (1958). Classics in the Theory of Public Finance. UK: Palgrave Macmillan. [Print copy only]
Backhaus, J. G., & Wagner, R. E. (Eds.). (2005). Handbook of Public Finance: Springer Science + Business Media, Inc. [Not yet available]
Handbook of Public Economics, Vols. 1 to 5.  [Print copy only ; Vol. 5 not yet available]

Course Outline
1. Introduction to Public Economics
Chapters 1 & 2. Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector. New York: WW Norton & Co. [Print copy only]
Backhaus, J. G., & Wagner, R. E. (2005a). Society, State and Public Finance: Setting the Analytical Stage. In J. G. [Not yet available]Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.  [Not yet available]
Musgrave, R. A. (1985). Chapter 1 A brief history of fiscal doctrine Handbook of Public Economics (Vol. 1, pp. 1-59): Elsevier. [Print copy only]
Stern, N. (2002). Towards a dynamic public economics. Journal of Public Economics, 86(3), 335-339. link [Open Access]
Wagner, A. (1958). Three Extracts on Public Finance. In R. A. Musgrave & A. T. Peacock (Eds.), Classics in the Theory of Public Finance (pp. 1-15). UK: Palgrave Macmillan.  [Print copy only]
World Bank. (2000-2001). World Development Report: Attacking Poverty. Executive Summary and Chapter 1. link [Open access]
Glaeser, E. L. (2013). Chapter 4 – Urban Public Finance. In R. C. M. F. Alan J. Auerbach & S. Emmanuel (Eds.), Handbook of Public Economics (Vol. 5, pp. 195-256): Elsevier.  [Not yet available]
Arulpragasam, J., & Lachler, U. (2010). Philippines: Fostering More Inclusive Growth. Executive Summary and Chapter 1. link [Open access]
Diokno, B. E. (2010). Philippine fiscal behavior in recent history. The Philippine Review of Economics, 47(1), 39-87. link [Open access]
2. Market Efficiency and Market failure
Chapters 3 & 4. Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector. New York: WW Norton & Co.
3. Efficiency and Equity
Chapters 7. Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector. New York: WW Norton & Co.
Stiglitz, J. E. (2012). The Price of Inequality. NY: WW Norton & Company. Chapters 1-4 [Print copy only]
Sobel, R. S. (2005). Welfare Economics and Public Finance. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc. [Not yet available]
Wagner, R. E. (2005b). Redistribution, Poor Relief, and the Welfare State. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance [Not yet available]
World Bank. (2006). World Development Report:Equity and Development. link [Open access]
Wodon, Q., & Yitzhaki, S. Chapter 2: Inequality and Social Welfare. In PRSP Sourcebook: World Bank. link [Open access]
4. Public Goods, Publicly Provided Private Goods, Privatization
Chapters 5 & 6. Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector. New York: WW Norton & Co.
Oakland, W. H. (1987). Chapter 9 Theory of public goods Handbook of Public Economics (Vol. 2, pp. 485-535): Elsevier.
Laffont, J.-J. (1987). Chapter 10 Incentives and the allocation of public goods Handbook of Public Economics (Vol. 2, pp. 537-569): Elsevier.
Rubinfeld, D. L. (1987). Chapter 11 The economics of the local public sector Handbook of Public Economics (Vol. 2, pp. 571-645): Elsevier.
Inman, R. P. (1987). Chapter 12 Markets, governments, and the “new” political economy Handbook of Public Economics (Vol. 2, pp. 647-777): Elsevier.
Scotchmer, S. (2002). Chapter 29 Local public goods and clubs Handbook of Public Economics (Vol. 4, pp. 1997-2042): Elsevier.
Hinds, S., Sanchez, N., & Schap, D. (2005). Public Enterprise: Retrospective Review and Prospective Theory. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Peirce, W. S. (2005). Privatization, Nationalization, and Aspects of Transition. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Klugman, J. (Ed.) (2002). Chapter 20. Private Sector and Infrastructure: Overview. link [Open access]
Prager, J. (1992). Is Privatization a Panacea for LDCs? Market Failure versus Public Sector Failure. The Journal of Developing Areas, 26(3), 301-322. link [Accessible via UPSE network only]
5. Natural Resources
World Bank. (2010). Development and Climate Change. Retrieved from  Overview and Chapter 1. link [Open access]
Bojö, J., Bucknall, J., Hamilton, K., Kishor, N., Kraus, C., & Pillai, P. Chapter 11. Environment PRSP Sourcebook: World Bank.  link [Open access]
Castro, G. (2000). Natural Resource Management. link [Open Access]
Magno, C. (2015). The Mining for Development Framework for the Philippines. link [Open access]
Heaps, T., & Helliwell, J. F. (1985). Chapter 8 The taxation of natural resources Handbook of Public Economics (Vol. 1, pp. 421-472): Elsevier.
Lans Bovenberg, A., & Goulder, L. H. (2002). Chapter 23 – Environmental Taxation and Regulation*. In J. A. Alan & F. Martin (Eds.), Handbook of Public Economics (Vol. 3, pp. 1471-1545): Elsevier.
Barnett, A. H., & Yandle, B. (2005). Regulation by Taxation. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Calder, J. (2014). Administering Fiscal Regimes for Extractive Industries: A Handbook Chapters 1 & 2
6. Public Production and Public Choice
Chapters 8 & 9. Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector.
Bös, D. (1985). Chapter 3 Public sector pricing Handbook of Public Economics (Vol. 1, pp. 129-211): Elsevier.
Groves, T., & Ledyard, J. (1977). Optimal Allocation of Public Goods: A Solution to the “Free Rider” Problem. Econometrica, 45(4), 783-809. link [Accessible via UPSE network only]
7. Analysis of Public Expenditure
Chapters 10 & 11. Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector.
Fozzard, A., Holmes, M., Klugman, J., & Withers, K. Chapter 6. Public Spending PRSP Sourcebook: World Bank.  link [Open access]
World Bank. (2011). Philippines: Public Expenditure Review. Executive Summary and Chapter 1 link [Open access]
Drèze, J., & Stern, N. (1987). Chapter 14 The theory of cost-benefit analysis Handbook of Public Economics (Vol. 2, pp. 909-989): Elsevier.
Schmid, A. A. (2005). Economic Analysis and Efficiency in Public Expenditure. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Boardman, A. E., Greenberg, D. H., Wining, A. R., & Weimer, D. L. (2011). Cost-Benefit Analysis: Concepts and Practice: Pearson. Chapter 1.  [Print copy only]
Brent, R. J. (2006). Applied Cost-Benefit Analysis. US: Edward Elgar Publishing Limited. Part 1. [Print copy only]
8. Education, Health Care, Infrastructure and Social Protection
Chapters 12-16. Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector.
Education
UNESCO. (2015). Philippines: Education for all national review. Executive Summary, Chapter 1. link [Open access]
Aoki, A., Bruns, B., Drabble, M., Marope, M., Mingat, A., Moock, P., . . . Yang, H. Chapter 19. Education PRSP Sourcebook: World Bank. link [Open access]
Hanushek, E. A. (2002). Chapter 30 Publicly provided education Handbook of Public Economics (Vol. 4, pp. 2045-2141): Elsevier.

Social Protection/Social Security
Coudouel, A., Ezemenari, K., Grosh, M., & Sherburne-Benz, L. Chapter 17. Social Protection PRSP Sourcebook: World Bank.  link [Open access]
Atkinson, A. B. (1987). Chapter 13 Income maintenance and social insurance Handbook of Public Economics (Vol. 2, pp. 779-908): Elsevier.
Feldstein, M., & Liebman, J. B. (2002). Chapter 32 Social security Handbook of Public Economics (Vol. 4, pp. 2245-2324): Elsevier.
Krueger, A. B., & Meyer, B. D. (2002). Chapter 33 Labor supply effects of social insurance Handbook of Public Economics (Vol. 4, pp. 2327-2392): Elsevier.
Moffitt, R. A. (2002). Chapter 34 Welfare programs and labor supply Handbook of Public Economics (Vol. 4, pp. 2393-2430): Elsevier.
Chetty, R., & Finkelstein, A. (2013). Chapter 3 – Social Insurance: Connecting Theory to Data. In R. C. M. F. Alan J. Auerbach & S. Emmanuel (Eds.), Handbook of Public Economics (Vol. 5, pp. 111-193): Elsevier.
Grossekettler, H. (2005). Social Insurance. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Reyes, C. M., & Tabuga, A. D. (2012). Conditional Cash Transfer Program in the Philippines: Is it Reaching the Extremely Poor.  link [Open access]
Usui, N. (2011). Searching for Effective Poverty Interventions: Conditional Cash Transfer in the Philippines. link [Open Access]
Claeson, M. et al. Chapter 18. Health, Nutrition, and Population PRSP Sourcebook: World Bank. link [Open Access]
Romualdez Jr. A.G., Rosa, J. F. E. d., Flavier, J. D. A., Quimbo, S. L. A., Hartigan-Go, K. Y., Lagrada, L. P., & David, L. C. (2011). The Philippines Health System Review. Retrieved from link [Open Access]
Cutler, D. M. (2002). Chapter 31 Health care and the public sector Handbook of Public Economics (Vol. 4, pp. 2143-2243): Elsevier.
Housing
Rosen, H. S. (1985). Chapter 7 Housing subsidies: Effects on housing decisions, efficiency, and equity Handbook of Public Economics (Vol. 1, pp. 375-420): Elsevier.
Wood, G. A. (2003). Taxation, Subsidies and Housing Market. In T. O. Sullivan & K. Gibb (Eds.), Housing Economics and Public Policy (pp. 110-134): Blackwell. [Not yet available]
Whitehead, C. M. E. (2003). The Economics of Social Housing. In T. O. Sullivan & K. Gibb (Eds.), Housing Economics and Public Policy (pp. 135-152): Blackwell. [Not yet available]
9. Taxation
Chapters 17-21. Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector.
Dixit, A. (1985). Chapter 6 Tax policy in open economies Handbook of Public Economics (Vol. 1, pp. 313-374): Elsevier.
Ahmad, E., & Stern, N. (1989). Taxation for developing countries Handbook of Development Economics (pp. 1005-1092): Elsevier.
Brennan, G., & Eusepi, G. (2005). Fiscal Constitutionalism. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Hettich, W., & Winer, S. L. (2005). Rules, Politics, and the Normative Analysis of Taxation. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
J.Martinez-Vazquez and R.M.Bird,. Chapter 1: Sustainable development requires a good tax system. In R. M. Bird & J. Martinez-Vazquez (Eds.), Taxation and Development: The Weakest Link?  [Not yet available]
Besley, T., & Persson, T. (2014). Why Do Developing Countries Tax So Little? Journal of Economic Perspectives, 28(4), 99-120. link [Accessible via Dilnet] ; [See e-Reserve Database]
Besley, T., & Persson, T. (2013). Chapter 2 – Taxation and Development. In R. C. M. F. Alan J. Auerbach & S. Emmanuel (Eds.), Handbook of Public Economics (Vol. 5, pp. 51-110): Elsevier.
Tanzi, V., & Zee, H. H. (2000). Tax Policy for Emerging Markets: Developing Countries. IMF Working Paper.  link [Open access]
Tax incidence
Kotlikoff, L. J., & Summers, L. H. (1987). Chapter 16 Tax incidence Handbook of Public Economics (Vol. 2, pp. 1043-1092): Elsevier.
Diamond, P. (1978). Tax incidence in a two good model. Journal of Public Economics, 9(3), 283-299. [See e-Reserve Database]
Fullerton, D., & Metcalf, G. E. (2002). Chapter 26 Tax incidence Handbook of Public Economics (Vol. 4, pp. 1787-1872): Elsevier.
Optimal Taxation
Chapters 22,23 & 25. Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector.
Auerbach, A. J. (1985). Chapter 2 The theory of excess burden and optimal taxation Handbook of Public Economics (Vol. 1, pp. 61-127): Elsevier.
Stiglitz, J. E. (1987). Chapter 15 Pareto efficient and optimal taxation and the new new welfare economics Handbook of Public Economics (Vol. 2, pp. 991-1042): Elsevier.
N. Gregory Mankiw, M. W., Danny Yagan. (2009). Optimal Taxation in Theory and Practice. NBER Working Paper No. 15071. link [Open access]
Mirrlees, J. A. (1976). Optimal tax theory. Journal of Public Economics, 6(4), 327-358. [See e-Reserve Database]
Sandmo, A. (1975). Optimal Taxation in the Presence of Externalities. The Swedish Journal of Economics, 77(1), 86-98. link [Accessible via Dilnet only]
Auerbach, A. J., & Hines Jr, J. R. (2002). Chapter 21 – Taxation and Economic Efficiency*. In J. A. Alan & F. Martin (Eds.), Handbook of Public Economics (Vol. 3, pp. 1347-1421): Elsevier.
International taxation
Gordon, R. H., & Hines Jr, J. R. (2002). Chapter 28 International taxation Handbook of Public Economics (Vol. 4, pp. 1935-1995): Elsevier.
Keen, M., & Konrad, K. A. (2013). Chapter 5 – The Theory of International Tax Competition and Coordination. In R. C. M. F. Alan J. Auerbach & S. Emmanuel (Eds.), Handbook of Public Economics (Vol. 5, pp. 257-328): Elsevier.
Kopczuk, W. (2013). Chapter 6 – Taxation of Intergenerational Transfers and Wealth. In R. C. M. F. Alan J. Auerbach & S. Emmanuel (Eds.), Handbook of Public Economics (Vol. 5, pp. 329-390): Elsevier.
Taxation of Income and Wealth
Douglas Bernheim, B. (2002). Chapter 18 – Taxation and Saving*. In J. A. Alan & F. Martin (Eds.), Handbook of Public Economics (Vol. 3, pp. 1173-1249): Elsevier.
Sandmo, A. (1985). Chapter 5 The effects of taxation on savings and risk taking Handbook of Public Economics (Vol. 1, pp. 265-311): Elsevier.
Poterba, J. M. (2002). Chapter 17 – Taxation, Risk-Taking, and Household Portfolio Behavior*. In J. A. Alan & F. Martin (Eds.), Handbook of Public Economics (Vol. 3, pp. 1109-1171): Elsevier.
Holcombe, R. G. (2005). Taxation, Production and Redistribution. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Taxation and Labor
Piketty, T., & Saez, E. (2013). Chapter 7 – Optimal Labor Income Taxation. In R. C. M. F. Alan J. Auerbach & S. Emmanuel (Eds.), Handbook of Public Economics (Vol. 5, pp. 391-474): Elsevier.
Hausman, J. A. (1985). Chapter 4 Taxes and labor supply Handbook of Public Economics (Vol. 1, pp. 213-263): Elsevier.
Rosen, H. S. (1980). What Is Labor Supply and Do Taxes Affect It? The American Economic Review, 70(2), 171-176.
Corporate Tax link [Accessible via UPSE network only]
Auerbach, A. J. (2002). Chapter 19 – Taxation and Corporate Financial Policy*. In J. A. Alan & F. Martin (Eds.), Handbook of Public Economics (Vol. 3, pp. 1251-1292): Elsevier.
Harberger, A. C. (1962). The Incidence of the Corporation Income Tax. Journal of Political Economy, 70(3), 215-240. link [Accessible via UPSE network only]
Hassett, K. A., & Glenn Hubbard, R. (2002). Chapter 20 – Tax Policy and Business Investment*. In J. A. Alan & F. Martin (Eds.), Handbook of Public Economics (Vol. 3, pp. 1293-1343): Elsevier.
Consumption Tax
Shoup, C. (1988). The Value Added Tax and Developing Countries. The World Bank Research Observer, 3(2), 139-156. link [Accessible via UPSE network only]
Unitended Consequences of Taxation
Slemrod, J., & Yitzhaki, S. (2002). Chapter 22 – Tax Avoidance, Evasion, and Administration*. In J. A. Alan & F. Martin (Eds.), Handbook of Public Economics (Vol. 3, pp. 1423-1470): Elsevier.
Marchese, C. (2005). Taxation, Black Markets and Other Unintended Consequences. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Andreoni, J., & Payne, A. A. (2013). Chapter 1 – Charitable Giving. In R. C. M. F. Alan J. Auerbach & S. Emmanuel (Eds.), Handbook of Public Economics (Vol. 5, pp. 1-50): Elsevier.
Land tax
Foldvary, F. E. (2005). Public Revenue from Land Rent. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Tax Reform
Zee, H. H. (2005). Personal Income Tax Reform: Concepts, Issues and Comparative Country Development. IMF Working Paper. link [Open access]
Stiglitz, J. E. (2002). New perspectives on public finance: recent achievements and future challenges. Journal of Public Economics, 86(3), 341-360. link [Open access] link [Accessible via Dilnet]
10. Fiscal Balance and Deficit Financing
Wagner, R. E. (2005a). Debt, Money and Public Finance. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Blanchard, O. J. (1985). Debt, Deficits, and Finite Horizons. Journal of Political Economy, 93(2), 223-247.  link [Open access] link [Accessible via UPSE network]
Blanchard, O., Chouraqui, J.-C., Hagemann, R. P., & Sartor, N. (1990). The Sustainability of Fiscal Policy: New Answers to An Old Question. OECD Economic Studies No. 15. link [Open access]
Diokno, B. E. (2007). Economic and Fiscal Policy Determinants of Public Deficits: The Philippine Case. Philippine Center for Economic Development. Quezon City. link [Open access]
Hamilton, J. D., & Flavin, M. A. (1986). On the Limitations of Government Borrowing: A Framework for Empirical Testing. The American Economic Review, 76(4), 808-819. link [Accessible via UPSE network only]
Reinhart, C. M., Rogoff, K. S., & Savastano, M. A. (2003). Debt Intolerance. Brookings Papers on Economic Activity, 2003(1), 1-62. link [Open access]
11. Decentralization /subnational governments
Chapters 26-28. Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector.
Josselin, J.-M., & Marciano, A. (2005). Federalism and Subsidiarity in National and International Contexts. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Tiebout, C. M. (1956). A Pure Theory of Local Expenditures. Journal of Political Economy, 64(5), 416-424. link [Accessible via Dilnet only]
Bewley, T. F. (1981). A Critique of Tiebout’s Theory of Local Public Expenditures. Econometrica, 49(3), 713-740. link [Accessible via Dilnet only]
Oates, W. E. (1999). An Essay on Fiscal Federalism. Journal of Economic Literature, 37(3), 1120-1149.  link [Open access]  link [Accessible via UPSE network only]
Oates, W. E. (2006). On the Theory and Practice of Fiscal Decentralization. IFIR Working Paper No. 2006-05. link [Open access]
Blankart, C. B., & Borck, R. (2005). Local Public Finance. In J. G. Backhaus & R. E. Wagner (Eds.), Handbook of Public Finance: Springer Science + Business Media, Inc.
Rondinelli, D. A., McCullough, J. S., & Johnson, R. W. (1989). Analysing Decentralization Policies in Developing Countries: a Political-Economy Framework. Development and Change, 20(1), 57-87.  link [Open access]
Shah, A. (2004). Fiscal Decentralization in Developing and Transition Economies. World Bank Policy Research Working Paper 3282. link [Open access]
Prud’homme, R. (1995). The Dangers of Decentralization. The World Bank Research Observer, 10(2), 201-220.
12. Economic Analysis of Law link [Open access]
Persson, T., & Tabellini, G. (2002). Chapter 24 – Political Economics and Public Finance*. In J. A. Alan & F. Martin (Eds.), Handbook of Public Economics (Vol. 3, pp. 1549-1659): Elsevier.
Kaplow, L., & Shavell, S. (2002). Chapter 25 – Economic Analysis of Law. In J. A. Alan & F. Martin (Eds.), Handbook of Public Economics (Vol. 3, pp. 1661-1784): Elsevier.