PS Economics & the Public Sector
Undergraduate course at the University of Innsbruck, Department of Public Finance
In this course students are taught about Public Economics and the arguments as well as effects of market interventions.
Usually, students attend in the third semester after completion of the courses in Fundamentals in Economics and Theory of Economic Decisions. The course learns students to find arguments for the following questions: When should the government intervene in the economy? Which instruments are available to the government for interventions? How will government intervention affect the decisions of market participants and market outcomes? The seminars are structured in the following main subjects:
Public goods
Covers the criteria how to distinguish goods into the types of public goods. Furthermore, the optimal consumption bundle is discussed, how individual utility functions are aggregated, and the derivation of the Samuelson condition shown.
Externalities
Shows how deviations from the optimal consumption bundles emerge in the presence of externalities and conditions for a Pigou tax.
Redistribution
Discusses the first and second welfare theorem and when unsophisticated tax designs can backfire.
Taxation
Discusses the effects of taxes on products and how to disentangle them into substitution effect and income effect.