This course examines the role of the public sector in the economy. Students will learn about the theoretical motivations for and effects of government involvement in the economy as well as the empirical evidence regarding the consequences of such intervention. Students of economics should expect that rational economic agents will respond predictably to changes in incentives. This course will explore the incentive structure implied by government involvement in the economy and the predicted behavioral responses of individuals and firms.
The structure of the major revenue raising (i.e., taxation) and expenditure operations of the government will be analyzed using microeconomic tools to determine their allocative and distributive effects.