École d’affaires publiques, Master politiques publiques
We will study public policies aimed at ﬁnding solutions to these essential problems : antitrust policy, tax policy, labor laws. The course will be strongly grounded in practical examples, including case studies and newspaper articles. Required reading : “Interemediate Public Economics” (J. Hindricks and G. Myles).
PUBLIC ECONOMICS LEVEL 3
Semester : Autumn Number of hours : 36 Language of tuition : English
Opened to the exchange program
Teachers : Clément MALGOUYRES (Economiste). Prerequisite : While the level of formalism will be kept at a minimum, students should be familiar with solving basic optimization problems (constrained and unconstrained) and have a good knowledge of intermediate microeconomics. A solid understanding of intermediate microeconomics is strongly recommended at a level such as : Walter Nicholson, "Microeconomic Theory : Basic Principles and Extensions" and Hal Varian, "Intermediate Microeconomics". A basic knowledge of statistics and empirical methods in applied economics is required to make the most out of the readings, although intuitive explanations of relevant empirical ﬁndings will be given in class. A good reference is : James H. and Mark W. Watson "Introduction to Econometrics". Pedagogical format : Lecture and tutorials Senior lecturers : Clara MARTINEZ-TOLEDANO TOLEDANO (Etudiante doctorante). Course validation : A mid-term 50% and a ﬁnal exam 50%. Continuous assessment : 3 homework sessions. Course Description : The course starts by introducing the discipline of public economics and present the different functions of government in modern market economies and how it evolved over the last century. It then reviews basic microeconomic results in a world under perfect competition where the invisible hand is at work and where public intervention cannot be justiﬁed on the basis of efﬁciency.
We will then explore various causes of market failures and investigate to which extent public intervention can mitigate them. The ﬁrst category of failures is externality, which we will frame as an issue of missing markets. The second category is public goods. We will deﬁne the different types of public goods and see how to best organize their provision. The third category of market failure ﬁnd its root in asymmetric information, giving rise to adverse selection and moral hazard issues. We will look at applications in different markets and see how private information can justify the provision of social insurance, an increasingly prominent function of the government. The fourth market failure, we will study is the issue of market power and concentrated markets. To do this, we will introduce tools and equilibrium concepts from game theory. We will ﬁnally study the issue of taxation, notably the distinction between the nominal and economic incidence of taxes and how the government, under different constraints in terms of tax instruments and required revenue, can raise that revenue at a minimal efﬁciency cost. We will conclude if time allow by investigating the consequences of behavioral issues, such as individual failure to optimize, for public economics. Required reading : Summers, L. (1989). “Some Simple Economics of Mandated Beneﬁts,” American Economic Review, 177-183 ; Akerlof, George, 1978, The economics of ‘tagging' as applied to the optimal income tax,welfare programs, and manpower training, American Economic Review 68, 8–19 ; Moretti, Enrico "Estimating the Social Return to Higher Education : Evidence From Longitudinal and Repeated Cross-Sectional Data", Journal of Econometrics 121(1-2), 2004 ; Fack, G. et Grenet, J. (2010) When do Better Schools Raise Housing Prices ? Evidence from Paris Public and Private Schools », Journal of Public Economics, vol. 94, n° 1-2, p. 59-77 ; Liran Einav Amy Finkelstein, Selection in Insurance Markets : Theory and Empirics in Pictures, Journal of Economics Perspectives Vol. 25, No. 1, Winter 2011 (pp. 115-38).
Semester : Autumn Nu