Public Finances

Description

We define and refine the fundamental principles underpinning the theory of Public Finance. We start with a general overview of government spending and the revenue raising instruments which finance these expenditures (with a focus on tax instruments). Second, the role and objectives of public policy - such as the provision of public goods, redistribution, or correction of market failures through e.g. taxation, regulation or social security- will be analysed applying the framework of Welfare Economics. Through this framework we come to grips with the potential welfare losses caused by inefficient behaviour of economic agents (firms and consumers), which governments can then mitigate by means of market intervention. Upon completion of this course the student will successfully: distinguish and define the key concepts behind Public Finance; describe as well explain the underlying relationships between all of these concepts; look at recent events regarding public finance (in Belgium as well as internationally) from a critical perspective, employing the framework at hand; quantify cost and benefit of policy choices;