After completing the course, the student is expected to be able to:
- explain the functioning of the public sector and what are the current problems within this area
- apply the basic methods for analysis that are used to study the public sector
Why is economic analysis of the public sector a separate area of specialisation within the vast subject of economics? Is it the extent of collective power and its influence that have created this field, the public sector constitutes two thirds of GDP? Or is it the collective decision-making that differs from the mainly individual decisions in market models that motivates a special study? Both questions can be said to motivate studies of public economics.
Overall goals in the public sector are efficiency, welfare distribution and freedom. What are the connections between the overall goals and the more concrete demands for justice, healthcare, education and public transports, to mention some of the tasks that are fulfiled by the public sector? The course presents analytical tools, shows how economists have used these analytical tools and discusses concrete applications against the background of Swedish and American conditions. The theoretical background is mainly the economic welfare theory that uses the concepts and analytical methods of micro theory. The course also refers to questions related to political decision-making, moral philosophy and legal financial theory.
The course starts by dealing with theoretical starting points. Then, there are approaches to problems that relate to the expenses in the public sector and how these expenses are used. Finally, the incomes in the public sector are considered, i.e. mainly the taxation system and those problems that are due to the design of the taxation system.
The instruction consists of lectures with exercises.