PUBLIC FINANCE

Course taught in English

1. Knowledge and understanding: The course’s goal is to provide students with advanced knowledge and skills on the role of public finance and, especially, on the effects of taxation in the modern market economies. The course will develop analytical knowledge of the main tools of the public sector’s taxation activity, following the most recent theoretical developments and normative provisions.
2. Applying knowledge and understanding: The development of analytical skills on the structure and the implications of the different tax models will allow students to deal with the problems related to economic-managerial decisions, thus taking into account the effects caused by taxation.
3. Making judgements: The acquisition of analytical competences concerning the basic variables and tools of public finance will enable students to autonomously evaluate the fiscal and economic-financial implications of different investment choices, as well as the different economic-managerial phenomena, taking into account also the taxation aspect.
4. Communication skills: The student will develop communication skills and an appropriate technical language, with special regard to the analysis of the macroeconomic and microeconomic context, concerning those variables of public finance, which are relevant for corporate finance decisions, so as to be able to convey technically rigorous information to experts and non-experts.
5. Learning skills: Students’ learning skills will be stimulated through a proper interaction and discussion on the general knowledge and skills and on their application to case studies.

The course is structured through lectures, carried out with the support of slides and additional educational material that is made available to students through the Studium platform. In order to consolidate the understanding of the topics covered and the analytical skills of the students at the end of the discussion of the individual topics in the program, there will be classroom exercises carried out by the teacher.

No prerequisites. Although not mandatory, however, a good knowledge of microeconomics tools at intermediate level is strongly recommended. Furthermore some knowledge of intermediate calculus and statistics is endorsed.

Usually mandatory.

Market failures and government intervention. The tools of public finance, the role of the national budget and fiscal policy. The analytical tools of public finance, the role of the budget and fiscal policy. General issues involved in taxation of income from different sources such as labour, risk taking, wealth and business income, including the treatment of corporate income. The short- and long-run impacts of the income tax on output, allocation of time, labour supply and investment, and more generally on the efficiency of resource use. The incidence of the labour, risk taking, wealth and business income tax, including its effects on product prices, return to investment, and wages. The tax system in practice: the personal income tax, the value added tax, the taxation of capital and business income. Taxation and regulation of the financial sector.

1. J. Gruber. Public Finance and Public Policy. 3rd ed. Worth Publishers, 2009. (Chapters 1, 2, 18, 19, 20, 21, 22, 23, 24).

2. J. Hindriks and G.D. Myles. Intermediate public economics. Cambridge: MIT press, 2006. (Chapters 14 – excluding paragraphs 14.8 and 14.9, and 15 – excluding paragraphs 15.6, 15.7, 15.8, and 15.9).

3. R. de Mooij and G. Nicodème (Eds). Taxation and Regulation of the Financial Sector: MIT Press, 2014. (Chapters 1, 2, 3, 4, 5, 10, 11, 12, 13).

Other useful readings:

B. Salanie. The Economics of Taxation, Cambridge: MIT Press, 2010.

L. Kaplow. The Theory of Taxation and Public Economics. Princeton University Press, 2008.

R.W. Boadway. From optimal tax theory to tax policy: retrospective and prospective views. MIT Press, 2012.

Evaluation is always carried out by means of a written exam test.

It is strongly suggested to review the self-assessment questions and tests reported at the end of each chapter of Texts 1 and 2. Some examples of examinations delivered in past years are also available on Studium website.