Public finance (2020/2021)

Learning outcomes

The aim of the course is to provide students with rigorous economic tools for the modern analysis of public policies. We will review the justifications for the economic role of the state, focusing on the role of public expenditure, taxation and regulatory policies. We will supplement the analysis of theoretical models with evidence from Italian public policies. We will focus on the underlying motivations behind public interventions and on the effect of public policies in terms of efficiency and equity. At completion of the course, students should be able to understand and evaluate critically the justifications for the public intervention in the economy, to analyse and assess rigorously public policies on the basis of economic theory, as well as to master the economic analysis of the main Italian taxation tools.

The course involve 80 hours of teaching activities (organized in lectures and exercise classes).
Activities will involve also interactions ad discussions with students and exercise solutions.

The course programme covers three parts.
Part I, Intorduction and public expenditure:
- Introduction to main tools for the analysis of public finance.
- Analysis of the public spending components related to market failures (public goods, externalities, social expenditure).
- Investigation of the main issues concerning the economic analysis of social security systems, with particular attention to the problems related to the reform of the Italian pension system.

Part II Economics of taxation:
- Introduction to the economic analysis of taxes.
- Distribution of income, wealth and poverty
- Theories of income (re)distribution
- Equity and efficiency in commodity and income taxation, and the effects of taxation on individual behaviour.
- An introduction to the Italian tax system and the economic analysis of Italian personal income tax.
- An introduction to the main economic issues related to fiscal federalism.

Part III The economic analysis of the Italian tax system
- Public revenue: economic classifications, compliance, horizontal equity and vertical equity.
- The Italian tax system: institutional and economic characteristics of the main taxes and effects of recent reforms. Income Tax for Individuals (IRPEF), corporate income tax (IRES).
- Indirect taxes. The tax revenues at regional level, for provinces and municipalities


The textbooks ofr the course are as follows:
- Harvey S. Rosen e Ted Gayer (2018): Scienza delle Finanze. McGraw-Hill (fifth edition).
- Paolo Bosi, M. Cecilia Guerra (2021): I tributi nell'economia italiana. Il Mulino. Preferably new edition updated to 2021 if available (usually published by the end of March of the reference year).

Additional text for selected readings:
Paolo Bosi (2020): Corso di scienza delle finanze (8a edizione). Il Mulino. (a selection of the material taken from some chapters of this book will be communicated during the lectures and on the e-learning web page).

The teaching methods will cover lectures and exercises. Tutoring activities will be develloped in parallel with lectures.
Students will be able to access in advance the material related to each lecture in order to stimulate the discussion in class.

The detailed outline of the course will be provided during the teaching period. Teaching material, exercises, and detailed outline will be made available on the University e-learning website of the course.