Summary information (academic year 2011-2012)

Lecturer:	Massimo D'Antoni Office hours: Thursday h. 14-16.
Lectures schedule:	Classes take place in the 2nd semester (March through May 2012), on Wednesday (h. 12-14, Aula 7) Thursday (h. 12-14, Aula 7) In some cases, classes may take place on Monday (h. 12-14, Aula 7).
Objectives:	The course is aimed at providing — at an intermediate/advanced level — the conceptual tools necessary to analyse the economic role of the state. The approach emphasizes the relation between theoretical thinking and concrete public policy options. The course focuses on the following topics: the allocative function of the state as a response to market failures (public goods, externalities, information asymmetries, market power); the role of the state in health care and pensions, with an emphasis on the incompleteness and failures of insurance markets; the redistributive role of the state, the relation between equity and efficiency, comparative analysis of tax systems, principles of optimal taxation.
Recommended prerequisites:	Knowledge of microeconomics at an intermediate/advanced level, and macroeconomics at an intermediate level. Principles of static optimization. Basic econometric tools.
Contents:	Market, efficiency and equity. The fundamental theorems of welfare economics; efficiency and the compensation test; efficiency and equity in the design of public policy; welfare economics and Arrow's impossibility result. Public goods. Voluntary provision of public goods; mechanisms for the provision of public goods; inequality and private provision of public goods. The economics of the welfare state. Insurance market failures; lack of insurance coverage in health; long-term growth in healts. Pensions; pay-as-you-go vs fully funded systems; the effect of pensions on savings and labor supply; long-term sustainability of pension systems. The welfare state as an insurance device. Topics in the theory of taxation. The distortionary effect of taxes; income tax: consumption vs income; effect of taxation on savings; corporate taxation and investments; capital taxation; international tax competition; comparative analysis of tax systems and recent trends of reform. Optimal taxation. Redistribution and second best; optimal commodity taxation; provision of public goods with distortionary taxes; cost-benefit analysis and redistribution.
References:	Useful general references are: Hindrick J. and Myles G., Intermediate public economics, MIT Press, 2006 Leach J., A course in public economics, Cambridge U. Press, 2004 Atkinson A.B. and Stiglitz J.E., Lectures in public economics, Mc-Graw-Hill, 1980. Additional readings and specific references will be given during lectures.
Exam:	The final evaluation will be based on: active participation to lectures, including a presentation of assigned readings; a written examination (including an optional intermediate test). Dates of final written examinations: 12 June h. 11 3 July h. 11 11 September h. 11 26 September h. 11