• header Image

Public Economics: Theory and Policy

Home/ Public Economics: Theory and Policy
Course Type Course Code No. Of Credits
Discipline Core NSUS1EC111 4

Course Coordinator and Team:                  SES Faculty

Email of course coordinator:                       pcbabed@aud.ac.in  

Pre-requisites:                                               No

Course Description: 

 This is one of the compulsory courses developed for B.A. Economics students to orient them about the public sector and its functioning in general and issues pertaining to the public finances in particular. The course discusses some of the most essential aspects of public economics from theoretical and applied perspectives. It also aims to introduce students to the various issues in the Indian public finances and highlight the vital role public institutions play in a federal structure. Further, it contextualises the public sector's contemporary issues from the Global South perspective towards attaining the global development agenda.

Course Objectives:

  • Adapt their micro- and macro-level understanding of the economic system & critically evaluate the scope and nature of public intervention & public provision of goods and services.
  • Explain the role of public policy in general and fiscal functions in particular.
  • Discuss the basic tenets of tax structure and assess associated economic issues of policy relevance.
  • Outline the terminology of budget documents and examine its relevance for the functioning of the economy as a whole.
  • Identify the ongoing public policy debates and assess the scope of further study in public economics.

Course Outcomes:  At the end of the course students should be able to:

  • To appreciate the role of public intervention in an economy
  • To demonstrate with graphs the Pareto optimality in the provisioning of public goods vis-à-vis private goods
  • To explain the theoretical underpinnings of a tax structure
  • To analytically comprehend the trends and composition of the Indian government revenues and expenditures.
  • To comprehend the importance of public institutions in cooperative and competitive federalism
  • To understand the evolving landscape of fiscal space for the governments from a perspective of the Global South

Brief description of the modules: 

Module 1: Introduction

This module introduces the students to the role and significance of the public sector and aspects of public policy. It acquaints them with the different approaches of economic analysis (such as positive and normative) and familiarises them with the nature and scope of functions performed by the public sector in an economy.

Module 2: Public Economics: Efficiency and Welfare Perspectives

In the backdrop of market failures and difficulties in attaining efficient outcomes even under competitive market conditions, this module revisits the concept of efficiency and Pareto optimality from a theoretical point of view. It explores the cases of public versus private goods, as well as positive and negative externalities, and emphasises the challenges involved in provisioning public goods and services, addressing positive/negative externalities by contextualising the need for suitable public interventions.

Module 3: Theory of Taxation

This module covers the integral components of taxation policy in terms of their efficiency and equity considerations. It discusses the various types (or classifications) of taxes, principles of taxation and choice of tax base, concepts of tax incidence, excess burden and optimal taxation. In addition, it emphasises their analytical relation with the overall requirements of a good tax structure.

Module 4: Indian Public Finances: Pattern, Trends and Composition

It introduces the students to the classification of sources of revenue and expenditure heads and appreciation of their relevance to the overall process of economic growth and development. In addition, it aims to introduce the pattern of revenue and expenditure of the Indian government at the national and sub-national levels.

Module 5: Fiscal Federalism and Institutional Governance

This module covers the aspects related to the federal structure and the functioning of the public sector in a democratic system. It thus engages students with the roles and responsibilities of the different levels of the government in a country such as India. In addition, it discusses the issues related to the centre-state financial relations and puts emphasis on the role of institutions such as the Finance Commission and NITI Aayog.

Module 6: Contemporary Issues in Public Policy and the Global South

Since the beginning of the 21st century, the world has come to terms with myriad crises that have significantly impacted domestic public resources in the global south. Consequently, there is increasing emphasis on constrained fiscal space and the need for strengthening the abilities of their governments to fulfil the agenda of sustainability and resilience in the times ahead. This module acquaints students with the issues and challenges for public policy in the developing world in the context of the evolving trends and changing landscape of taxation from a global perspective. 

Assessment Plan

S.No

Assessment

Weightage

1

Class Test

30%

2

Assignment

30%

3

End Term

40%

References

  • Cullis, J., & Jones, P. (2009). Public finance and public choice: analytical perspectives. Oxford University Press, USA.
  • Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the public sector: Fourth international student edition. WW Norton & Company.
  • Karnam, G., Public Expenditure in India: Policies and Development Outcomes, Oxford University Press, UK
Top