ECO 479 · Spring 2005 | Aaron Yelowitz

Archived syllabus. Policies, dates, assignments, and readings reflect Spring 2005. Obsolete contact details and inactive course-site URLs have been omitted.

Course information

Institution: University of Kentucky
Instructor: Professor Aaron Yelowitz
Term: Spring 2005

Class meetings

Tuesday/Thursday, 12:30-1:45 pm, Business and Economics Building 213.

Instructor

Professor Aaron Yelowitz

My background : I am an associate professor in the economics department. This is my fourth year at UK. Before I joined UK, I was an assistant professor in the economics department at UCLA, from 1994 to 2001. I received my Ph.D. in economics from MIT in 1994, and my B.A. from UC Santa Barbara in 1990. My research interests have focused on low-income households – especially concerning the housing and health insurance decisions that these groups are faced with. In some parts of the course, particularly on the U.S. welfare system, I will incorporate some of my previous research.

Enrollment

If you want to enroll in this class, you need to talk to Debbie Wheeler in the economics department; she handles that.

Course description

This course examines the role of federal, state and local governments in the economy, both from a theoretical perspective and with analyses of U.S. institutions in particular. Both the taxation side and the expenditure side of the government budget will be analyzed. Questions to be answered include: Why should the government intervene in the working of private markets or goods or services? What kind of interventions are most desirable? What efficiency consequences result from government regulation or taxation? How would individuals or firms change their behavior in response to government policies?

Prerequisites

Economics 201 and 202. Calculus will be used in this course, you cannot get through this class without it. The tests will have a math-emphasis.

Textbook and online class notes

Harvey Rosen, Public Finance, 7 th edition (McGraw-Hill Higher Education, 2005, ISBN 0072876484). Earlier versions of the textbook, often found on eBay, are acceptable and encouraged . I will put the class lectures on the web site. You will be able to download these notes and the figures in Acrobat format. The on-line figures are in color, but you should be able to interpret them easily even in black and white. There are a lot of figures – unlike the textbook, which has one graph for one concept with a lot of details, the lecture note graphs go through the concept in many steps. Feel free to download the notes, or get a copy of the notes from a classmate. You will be expected to review the class notes before coming to class. I will incorporate PowerPoint slides into some the lectures. The class notes are identical to the ones used in previous semesters (although some additional handouts may be distributed toward the end of the semester). Please note that the ordering of the topics has changed this semester, compared to previous semesters!

Course website

The web site will have links to download the lecture notes. In addition, I will sometimes send announcements by email.

Preparing for class

You should download and read the lecture notes ahead of time. During class, we will spend considerable time on problem solving -- at which time you will be asked to go through questions that are representative of test questions. If you read through the notes ahead of time, this should be valuable preparation for the exam.

Studying for the exams

The best way to study for the exams is to review the numerous worked-out examples during class, and to review past midterms and finals. The old exams may be found on the web site. There are solutions for some of the questions. In preparing for the exams, you should be aware that students who simply read through the old questions without trying to independently solve them usually are the ones who run into problems.

Grading

The final is on Tuesday, May 3, 2005, 1:00 pm. The final will be cumulative. It will count for 25% of your grade. It lasts 2 hours.
You will be given three tests; the best two count for your grade. Each test counts for 25% of your grade, and altogether the best two count for 50% of your grade.

Test dates

Test #1: February 1, 2005 (Tuesday)
Test #2: February 24, 2005 (Thursday)
Test #3: March 31, 2005 (Thursday)

Attendance – 25% of grade. At random points during the semester, I will take attendance and award points to those who are in attendance that day. The amount of points may vary, with 25 points total.

The tests will be based on the mainly on the lectures (and to a smaller degree, the textbook readings). A good guide are the old midterms or finals – in fact some questions might come directly from these old questions! The lecture and reading will not always cover the same material -- you are responsible for the material in the lectures and all the readings. This is especially true of the section called “Social policy and expenditure programs for the poor,” where I will discuss material that is not in the book. Please check to be sure that you can take all the tests (or at least two of the three if you are feeling very confident): there will be no alternative dates for the tests.

Grading policy

Grades will be based on tests and the final only. Procedure for re-evaluation of disputed exam scores: Requests must be submitted in writing with an explanation of the error the student believes has been made. Written requests and test sheet must be submitted within one week of the date on which the exams are returned. All tests submitted for re-evaluation will be entirely regraded. The curve depends on my assessment of class performance. Historically, the median grade in the class has been a B.

University holidays and cancelled classes

According to the university calendar, there will be no class on March 15 or 17, 2005 for Spring Break.

Economics 479 Course Outline, Spring 2005

I. Introduction and Tools of Public Finance

A. Introduction to public finance

Rosen, Chapter 1, and appendix

B. Tools of normative analysis

Rosen, chapter 3 including appendix

II. Analysis of Public Expenditure

A. Theory of public goods

Rosen, chapter 4

B. Externalities

Rosen, chapter 5

C. Social policy and expenditure programs for the poor

Rosen, chapters 7 and 8

III. The United States Revenue System

A. The personal income tax

Rosen, chapter 15

Additional handouts:

The impact of the tax system on investments

Understanding home ownership

IV. Analysis of Public Expenditure, continued

A. Social security

Rosen, chapter 9

B. Health care

Rosen, chapter 10

Additional handouts (note – you won’t be responsible for reading the entire 100-page study):

“Pay or play health insurance mandates”

V. A Framework for Tax Analysis

A. Taxation and income distribution

Rosen, chapter 12

B. Taxation and efficiency

Rosen, chapter 13

C. Efficient and equitable taxation

Rosen, chapter 14