PUBLIC ECONOMICS AND FISCAL FEDERALISM - 2

The course is among those characterizing the Master's Degree Programme in Governance of Public Organizations. The course aims to provide the essential elements of the economic aspects of public economic policies. Firstly, consider how public policies can interact with the market to achieve objectives of social efficiency and equity. In particular, economic policies are analyzed to tackle externalities, problems in the production of public goods, information asymmetries and uncertainty about future levels of income, with examples of environmental regulation, health policy and social security. Secondly, the macroeconomic framework for public policies and for those engaged in management and organization tasks in the public and social sectors is analyzed. In particular, the structure of the public budget, the effects of public spending and taxes on economic activity, the problems of public debt and its sustainability are discussed.
The third part of the course deals with the organisation of the State in several levels of government, with particular reference to the implementation of fiscal federalism in Italy.

1. Knowledge and comprehension skills:
1.1. understanding the motivations of public intervention in the economy and how the collectivity can take into account equity and efficiency to make public choices and supply goods and services;
1.2. understanding how public goods and externalities influence the choices of economic agents and tools used by the State to bring the economy back to efficiency;
1.3. understanding the characteristics and the functioning of the main Italian taxes ;
1.4. understand the Italian macroeconomic context;
1.5. understanding the economic implications of fiscal federalism.

2. Ability to apply knowledge and understanding:
2.1. using social choice models to determine the efficiency and equity of public intervention;
2.2. knowing how to identify the degree of progressivity and redistribution connected of different taxes;
2.3. knowing how to models for financing decentralized levels of government.

3. Ability to judge:
3.1. motivations of public intervention;
3.2. effects of taxes on the agents' economic choices;
3.3. economic issues related to fiscal federalism.

The course requires basic knowledge of microeconomics and macroeconomics.

FIRST PART
1. Introduction to the welfare economy
1.1 General equilibrium in a pure exchange economy
1.2 Contract curve and utility frontier
1.3 Social welfare functions
2. Market failures
2.1 Public goods
2.2 Externalities
3. Introduction to the theory of taxation
3.1 Income taxes
3.2 Consumption taxes
3.3 Taxes on enterprises
4 Economic effects of taxation
4.1 Progressivity
4.2 Redistributive effects

SECOND PART
5 Public finance in Italy
5.1 Structure of the Public Administration accounts: revenue and expenses
5.2 Public budget, DEF and budgetary policies
5.3 The public debt
5.4 The constraints on public finance
6. Fiscal federalism
6.1 Models of government and decentralization
6.2 Local finance and the autonomy of subnational governments
6.3 Regional and municipal taxes
6.4 Transfers and tax residues
6.5 Fiscal capacity, standard needs and equalization models
6.6 Fiscal federalism in Italy, with particular reference to the Italian National Health System
6.7 The asymmetric federalism

More details will be provided in Moodle.

1) Bosi P. (a cura di), Corso di scienza delle Finanze, Il Mulino, Bologna, VII edizione, 2015.
2) Brosio G, S. Piperno, Governo e finanza locale, Giappichelli, Quarta edizione (e-book)
The program might be supplemented with handouts during the course available on Moodle.

The exam consists of a written test, which aims to verify the learning of the concepts and the ability to apply them to concrete cases. There is no oral exam.
- Duration of the written exam: 1h-1: 30h
- Each answer is worth a variable number of points depending on the question.
- The final grade of the task is given by the sum of the points obtained in the answers.
- The exam is passed if the sum is at least 18.
- If the sum of the points exceeds 30 the "lode" will be awarded.

Questions can be:
- theoretical
- analytical exercises
- numerical exercises
- multiple choice questions
- charts, tables and fiscal indicators to be commented.

The Moodle website will include exercises and examples of exam questions with solutions.

The course is organized in:
a) lectures,
b) classroom exercises, with Active learning sessions guided by the teacher during the course.
c) individual study.
Students are encouraged to attend classes in an active way, reading the chapters of the book before coming to class and doing the exercises (available on the Moodle platform).

Italian

Further information will be available in Moodle.

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