The course focuses on the relationship between the public sector and the market in terms of both equity and efficiency. More specifically, the course provides the necessary tools to analyze when the public sector to intervene, the intervention can be effective and the problems that may arise due to imperfect information and other deviations from a perfect market environment.
The course begins with a discussion of the arguments for and against public sector involvement in different situations and continue to treat a variety of tools that policymakers can use to maximize welfare and justice with regard to both government expenditure and revenue side. Areas covered include public goods, externalities, social security, income redistribution, efficient and fair taxation, debt management, fiscal federalism and the constraints of globalization for fiscal policy. Part of the course is devoted to the question of how collective decisions are made and the challenges of a collective decision-making entails.