Syllabus for Public Finance (PADM5006)

Offered at California State University, Stanislaus through the Economics Dept., Fall 2013, for 3 units.   Class meets Thursdays 6:00 pm-8:40 pm in 1062 Acacia on the Stockton Campus.



 Elaine Peterson 

 Office hours:

In Turlock: M,W,F 10-10:50 am, &


 101 D Bizzini Hall


                   Tues. 5-5:40 pm

 Office Phone:


 In Stockton: Thurs. 5:00-5:45 pm

 Home Phone:

 529-3804 (Please, no calls after 8:00pm) 

 and also by appointment

 Official Email:



 More reliable email especially for longer emails or attachments please use


Course Description: Examines potential role of government fiscal policy in a market economy. Includes some review of economic theory, benefit-cost analysis, revenues, expenditures, fiscal federalism and the impact of implementing fiscal policy. (Prerequisite microeconomic or macroeconomic principles or consent of instructor.)

Course Objectives: Students will learn basic tools and theories of public finance economics.  Students will develop understanding of how economic theory can be used to study the relationship between government policy and the economy. Students will use economic theory to analyze government programs and to predict the consequences of government activity and inactivity. Students will analyze government expenditure and tax programs. Students will set up basic benefit cost analysis and identify pitfalls in existing analysis.  Students will prepare for PADM5007 State and Local Public Finance, which will cover expenditure and revenue issues from a more regional perspective and include carrying out proposals made in PADM5006.

Text: Rosen, Harvey S. & Gayer, Ted, Public Finance, 9th edition, Irwin/McGraw-Hill, Boston MA, 2010. (R)

Selected readings:
Fisher, Ronald, State and Local Public Finance, 3rd edition, Thompson South-Western, 2007. (F)

Tresch, Richard, "Common Pitfalls in Cost-Benefit Analysis", Public Finance, a normative theory, Business Publications, Inc. Plano, Texas, 1981. (T)

Articles drawn from professional journals and news publications such as: American Economic Review, Wall Street Journal, The Economist

Economic Report of the President, 2013 (ERP), & past editions are available for download at:

The White House,

Resources for Economists on the Internet

Other links found at or on BlackBoard.

Grading: Grading is intended to reflect evidence of student knowledge & understanding. Opportunities to provide such evidence include: class participation and short assignments, problem sets, exams, and a paper. The weights used in your final grade for these activities are:


Grading Weight

Class participation & short assignments 


Problem Sets


First Exam


Issue paper/Project Proposal


Final Exam


Class participation & short assignments: Regular attendance is expected. Reading should be done prior to class to enable participation.  If you must miss a class please contact me in advance or as soon as practical.  In some cases you may have an opportunity to make up work. Attendance will affect the class participation portion of the grade. Short assignments may be announced in class or via email and some may be done in class. WASC accreditation standards indicate for every hour in class students should be studying 2 to 3 hours.  This class meets 3 hours per week, so you should be studying 6 to 9 hours outside of class.  Please plan your time accordingly and try to use it efficiently.  If you do not understand something, make a note of it and bring it up in class as soon as possible.  The chapters relating to the material we will be discussing are indicated in the schedule below. In class think about the topic at hand, respectfully listen to your colleagues’ comments and questions, and offer your thoughtful comments and questions. Also please turn off beepers and cell phones.


Email: All students should join the email discussion list for this class as another way to participate and increase their learning experience.  Please submit your email address to the professor in writing or by sending an email message with your email address, your name, and the name of the class.  In all email messages please try to remember to indicate your full name, the name of the class, and a subject heading.  This basic information helps people know if they want to read your message.  There are a lot of junk emails, viruses, and worms going around so often people will delete your message without reading it if you forget such key information.  


Blackboard access: You can go to the web page and use your student id as your login and your CSU email password to get into a set of web pages restricted to students in the class.  For example under “Information & Syllabus” are some PowerPoint slide presentations I may use in class.  If you decide to access these, I strongly recommend that you DO NOT just hit print.  Some of the PowerPoint slide presentations are quite long.  It would probably be smarter to download them to look them over.  Then if you would like a printed copy consider going into PowerPoint and under print, choose the slides you want based on the page numbers and under “Print what” choose “handouts”, and under “slides per page” choose “6”.  This will kill fewer trees.  Some interesting articles are under “Documents & Content” and assignments are under “Assignments”


Problem Sets: There will be substantial homework assignments involving problems and essays. Feel free to work together on assignments, but be careful to use your own words in the work you hand in.  If you wish to quote a colleague please cite them, but be careful.  Many people do not like being misquoted and over use of quotes may be a sign that you do not understand the material.  Plagiarism will result in a failing grade. In working on a mathematical problem please show your work.  Try to proofread your work before you hand it in.  I will grade you based on what you wrote rather than what I hope you meant to write.  These assignments will be available through the course web page for this class and also distributed in class.  The intent of these assignments is for you to learn and to give you an opportunity to show that you have learned the material.  If after reading the relevant material and reviewing your notes you are unsure how to approach a problem ASK.


Exams: Please feel free to work together in studying, but not during exams. Cheating will result in a failing grade. Exams will involve essays. Essays should be well organized and thorough to indicate understanding and thought regarding the material covered. Examples of practice essay questions and old exams can be found through the course web page for this class Please note the dates of the exams in the schedule below and avoid scheduling conflicting activities.  In the event of an emergency remember my doctorate is in economics, not medicine.  After receiving appropriate medical treatment, as soon practical please get in touch with me by phone or email.  When leaving phone messages please remember to leave your full name, class, and say phone number slowly.


Issue Paper/Project Proposal: Choosing an interesting feasible topic is one of the parts of writing that most people find difficult. Therefore, you should probably start thinking about what you might like to write about soon. Once you have a few ideas try to determine if they are feasible as paper topics given the due date, the page guidelines, and the resources you have available.  If you cannot find any information on a topic it won’t usually be a very good 2-semester paper/project.  Similarly if you find tons of information, ask yourself whether there is an aspect that interests you and can be analyzed well from a public finance perspective.  Frequently you may start with a broad area you are interested in and then as you learn more about the topic narrow what you will write about to a particular aspect. Your topic should clearly tie to Public Finance and preferably relate to a state or local issue.  Some people find reading the local editorial pages or visiting policy oriented web pages such as Public Policy Institute of California helpful for stimulating ideas.  Often public policy issues related to your community or your work make good topics, but please check with your employer before revealing proprietary information. 

Start soon, be sure to do a basic search of literature such as through EconLit, PPIC, IRP, and local government publications before you try to write your proposal.  Think practically about what you are proposing to research in your full study and how you will do your research.  This assignment is intended to be similar to the preliminary research and proposal writing done prior to doing a full public policy study.  Write a short paper (approximately 10 double spaced typed pages) on your preliminary research of a topic that you will pursue further in PADM5007: State and Local Public Finance.  This paper should:

Summarize the key issue to be analyzed,

Make clear how the issue ties to public finance,

Clearly indicate what you are proposing to do in your full study and how including:

Identifying relevant questions and perspectives to be considered,

Identifying sources and tools that may be used to answer these questions,

Identifying likely impacts to be considered. 

All sources should be cited. Be careful to use your own words. Plagiarism will result in a failing grade. You are welcome to submit a preliminary draft prior to the due date for general comments and suggestions. You may also discuss your papers together and give each other helpful comments.  If you receive substantial help from another student in the class you should cite them in your paper. In the economics field professional recognition is given for frequent citation, similarly if your paper is good the colleagues you cite for their assistance will be given extra credit towards the class participation portion of their grade.  The library’s website of “How To” research guides may be helpful .

            Please review the University Institutional Review Board policies & procedures at .  If you conduct a survey you will need UIRB approval in advance.

            Before you turn your paper in please double check that it has basic required elements such as:

1) Your name

2) Paper Title

3) References

4) Clear relation to a public finance issue

5) Clear indication of what you are proposing to do in your full study and how you will do it


 Public Finance (PADM5006) Fall 2013 Schedule – Thursday Nights





Aug. 22


Introduction & Overview;
Review some Economic theory; Why do we have government? Difficulties of Measuring government impact;

Why do we need economics to analyze public policy?

Look at recent fiscal policy

Is Bush a Keynesian? Is Obama?

Is Paul Ryan?

Federal Deficits, the Federal Debt, & the Macroeconomy; Tax reform

Review principles text (supply & demand, price ceilings & floors, taxes & subsidies, elasticities)

R Appendix (Note: starts with basic principles but also includes indifference curves, income & substitution effects, consumer & producer surplus)

R Ch. 1 ,,

Economic Odd Couple, WSJ 8/27/01

Brian Blackstone, Is Productivity Growth Back In Grips of Baumol's Disease?, August 13, 2007; Page A2,,

Leonhardt, David, The Paradox of Corporate Taxes, Feb. 2, 2011,

Aug. 29


Positive & Normative Economics,
Welfare Economics, Indifference Curves, Contract Curves, 
Consumer & Producer Surplus

Review your principles of consumer theory, R Appendix

R Ch. 2 & 3
Look at the Table of Contents for the ERP 2013 vs. 2001

Submit a project topic report with a tentative title & list of references before Sept. 19

Sept. 5

& 12

Public Goods & Externalities

Brief  discussion of Political Economy of democracies

R Ch. 4 & 5

ERP 2012 Ch. 8,  

Sept. 19



Equity and Social Policy:

Education, Health Care, Social Insurance, Income redistribution & Poverty Programs, How do we value different distributions?

Tales of Progress & Frustration

Remember Baumol

R Ch. 7,  9 - 13

ERP 2012 Ch. 7,  re safety net

ERP 2013 Ch. 5,  re health care

Children’s Defense Fund Press Release, The State of America's Children 2012,  

Stiglitz, Joseph, “Securing Social Security for the Future”, The Economists’ Voice, Volume 2, Issue 1, 2005, Article 5

Oct. 3

& 10

Cost Benefit Analysis

R Ch. 8, T p. 556-562, Borjas, George J., “Calculating the Value of Life”, in Labor Economics, 5th Edition, New York, NY, McGraw-Hill/Irwin, pp. 218-219.

Oct. 17

Review/Q&A, First Exam


Oct. 24


Tax Incidence Theory
Partial Equilibrium Models
General Equilibrium Models

R Ch. 14



Oct. 31

Conflicting goals in tax design,
True incidence, & Efficiency Losses

R Ch. 15 & 16


Nov. 7

U.S. Personal & Corporate Taxes

R Ch. 17-19, Congressional Budget Office

Nov. 14

Other Sources of Revenue: Debt, Property tax, Consumption tax

R Ch. 20 & 21, Congressional Budget Office

Nov. 21

Fiscal Federalism

R Ch. 22, F Ch. 9

Nov. 28

Thanksgiving  Campus Closed

Dec. 5

Glimpses Ahead,

Project Proposal Due


Dec. 12, 2013 FINAL EXAM (Comprehensive)