B.E. International Program
Faculty of Economics, Thammasat University
EE
448 Selected Topics in Public Economics
Course Syllabus
Semester: Fall 2008 (August 10 – December 09, 2008)
Instructor: Ajarn Brian Kennedy
Office: Main Office, B.E. Program, 3rd floor, Faculty of Economics Building, or Main Office, BAS Program, 2nd Floor, Lib Building
Office hours: Wednesday and Friday, 11:00 a.m. – 12:30 p.m. or by appointment (I will be on campus Tuesday – Friday from 8:30 a.m. to 3:30 p.m, at either the Econ or Lib Building; often I stay until 6:30 or so.)
Contact Information: bkennedy@gmu.edu, bpk@econ.tu.ac.th, (I check email frequently), or Phone 01-442-7426 (after 7:30 a.m., before midnight)
Class Schedule: Wednesday and Friday, 12.30 p.m.- 2.00 p.m.
Room: Room 201, Econ Building
Course Content:
This class uses economic models and methods to analyze how individuals make collective choices. Using these models, we can model how a) voters behave under different voting systems, and how they make their decisions on who (or whether) to vote, b) how politicians and governments make decisions to raise revenue and allocate goods, and c) to model how bureaucracies make decisions. Throughout the course, every attempt will be made to model people engaged in politics using the same tools and assumptions that economists use to model how people behave under market conditions.
The first third of the course will be primarily concerned with voting models. Using the medium voter model as a base model, it will demonstrate the concepts of rational ignorance and rational irrationality, vote cycling, etc. The primary focus will be on how different incentives cause Homo Economicus to make decisions in the public sphere that are very different from the ones he makes in the private sphere.
The second third of the course shifts the focus to governments, to demonstrate why government decisions often vary widely from what either voters state they desire, or from what economists would view as socially beneficial. eindividuals make decisions. It also explores the empirical data on how governments actually make decisions, and explores proposals to reform government.
The final third of the course analyzes bureaucracies and bureaucrats. It examines how individuals and decision makers in bureaucracies maximize their own interests. This section will also offer anlysis of the rent-seeking society, the political buisness cycle, and other selected topics of public choice interest.
Prerequisites:
EE 311 and EE 340 or (b) EE 441 or (c) EE 442 or (d) permission of the instructor. All students should have a solid grasp of algebra, micro-economics and public finance. Knowledge of Industrial Organization and Game Theory would be helpful, but is not required.
Primary Text:
The primary text for the class will be
Rober Cooter, The Strategic Constitution, Available at
http://www.law.berkeley.edu/faculty/cooterr/PDFpapers/stratcon.PDF
Mancur Olson, The Logic of Collective Action
Joe Stevens, The Economics of Collective Choice, Boulder, Colorodo; Westview Press, 1993
Secondary Text:
Other Texts referenced will include
Donald Wittman, The Myth of Democratic Failure
Mancur Olson, The Rise and Decline of Nations, New Haven, Yale University Press, 1982
Joe Stevens, The Economics of Collective Choice, Boulder, Colorodo; Westview Press, 1993
Dennis Mueller, Perspectives on Public Choice
Dennis Mueller, Public Choice II
Dennis Mueller, Public Choice III
Jac Heckelman, Readings in Public Choice Economics
Randal G. Holcombe, From Liberty to Democracy: The Transformation of American Government
Joseph Stiglitz, Economics of the Public Sector
Joseph Stiglitz and A. Atkinson, Lectures in Public Economics
Evaluation:
The class evaluations will be based on three exams, given throughout the semester. Each exam will be 1½ hours in length, students will have a choice of what questions to answer. A sample exam will be passed out before the first exam.
Each exam is worth a percentage of your grade as given below. The Midterm exam, and the Final exam, will both be comprehensive. The exam schedule is given below:
Midterm Exam 40%
Final Exam: 60%
Cheating:
Don’t. If you do, and I catch you, you will be reported to the program director for appropriate punishment. At a minimum, you will receive a zero on the exam you are caught cheating on, other punishments include automatically failing the course, and being suspended for one (or more) semesters.
Topics: Below is a tentative course outline.
Section I: Voters
Week 1: Introduction to Public Choice
Week 1: Introduction to Public Choice
Private and social benefits and costs
Positive and negative externalities
Coase and Property Rights
Application: Regulation vs. trade-able permits
Week 2: The Logic of Collective Action
Public vs. private costs
Public goods, the Tragedy of the Commons, Free Riders
Week 3: The median voter model
Model Assumptions, model methods
Cycling, peaks, Condorcet voting
Week 4: The Median voter Model II
Extended numeric analysis of the model
The U.S. – First past the post
Thailand – Party list voting
The Thai Constitution of 1997, 2007
Week 5: Bargaining and Agenda Setting
The one and two dimension agenda setter
Indifference curve analyses
Week 6: The rational and irrational voter
Expressive voters
Rational Ignorance
Rational Irrationality
Other models of voter behavior
Week 7: Normative Implications
Other Voting systems
The case for limited government
Federalism and Tiebout Voting
Midterm Exam 1
Section II: Politicians and Politics
Week 8: Rent Seeking I
Week 9: Rent Seeking II
Week 10: Empirical Model: The Political Business Cycle
Week 11: Empirical Model:
Midterm Exam 2
Section III: Bureaucrats, Governments, and Normative Questions
Week 12: Principal-Agent models
Week 13: The Niskannen Revenue maximization model
Week 14: the Coase Theorem
Week 15: TBA
Week 16: TBA
Final Exam
Last ModifiedAugust 8, 2008->->