Economics: SustainabilityandPublicFinance

Topics such as national economic policies, income, wealth and welfare, financial markets and the macroeconomy, central banking, and other issues concerning macroeconomics and money. Topics vary by offering; periodic offering at intervals that may exceed four years. May be repeated for credit with different content. Prerequisites: STAT 1410, ECON 2400, and ECON 2450.

Prereqs enforced by the system: ECON 2400, ECON 2450 and STAT 1410. PACE students with permission and override. Instructor permission

HYBRID COURSE: The course will be delivered half remotely, half in person. CREDITS AND PREREQUISITES Topics in Public Finance is a 3 credit course. Prerequisites are EC1410, EC2400, and EC2450 or instructor permission. EC2210 is not required but recommended.

COURSE DESCRIPTION In this course, we explore in depth the role of the government in the economy focusing on the question of sustainability of public debt, the retirement system, the tax system, and economic development in the context of environmental externalities and policies. We cover various aspects of sustainability, with a special focus on intergenerational economics. Part of the course relies on the study of Nobel Prize Peter Diamond overlapping generations model and its extensions. This model is to this day a key tool used in public finance (and macroeconomics) to understand the implications of government policies on the economy and across generations of individuals, and assess their sustainability. • In Module 1, we formally review how individuals make static optimal choices and we extend the study of economic choices to intertemporal environments. • In Module 2, we study the largest social insurance system in the USA, the Social Security system. The system is facing solvency issues and we study reforms options to make it sustainable. We compare the effects of different Social Security systems on the economy and welfare across generations. • In Module 3, we study whether public debt that has risen in recent years is sustainable. We focus on the methods of public debt stabilization, the effect of public debt on the economy, and intergenerational distribution of wealth. • In Module 4, we study the US tax system and fundamental tax reforms. The US tax system faces a number of challenges. We especially focus on the equity and efficiency implications of fundamental tax reforms that are important for its sustainability. • In Module 5, we study sustainable development focusing on environmental externalities. We study environmental policy and the trade-offs it involves across generations focusing on sustainable development. LEARNING OBJECTIVES The objective of this course is to train economists to the current practice of public finance. After this course, you should be able to: • Describe the features of some key public policy programs in the USA (written, visual and oral communication), • Upgrade your technical skills to address public policy issues as an up-to-date economist (quantitative reasoning/ applied data interpretation), • Apply advanced models to assess the consequences of government policies on economic sustainability (analytical and critical thinking), • Assess the efficiency and equity consequences of government programs and public policy reforms across generations (ethical reasoning and decision making).

ASSESSMENTS Homework assignments: 40% of the total performance. Three exams (60% of the total performance)