Politica economica -ENG

Economic policy

Paolo Ghinetti
Casale Monferrato
SS-D: SECS-P/02
8 credits, 64 hours

Educational aims
The aim of the course is to analyse the motives and the effects of public policy interventions in the economy, and the associated problems. The course is divided in two parts.
The first part illustrates the purposes of economic policies over different time horizons, and the conditions under which they can be effective in pursuing a nomber of key targets: reduction of the impact of economic shock on GDP and available income in the short run; economic growth in the long run, both in open and close economy.
The second part analyses how the State gets the resources used to finance the complex of economic policies, and which are the main programs of public intervention in the economy. In particular, we will analyse the main features of the (Italian) taxation sysem (income and corporate income tax schedules, VAT, etc) and of the main components of the public expentiture system, from both an institutional and theoretica point of view.


Content of the course:

FIRST PART
INTRODUCTION
Economics and Economic Policy
THE CLASSIC THEORY: THE LONG PERIOD
A review: The equilibrium in closed economy; income-expenditure circuit, GDP and its components
Open economy: the international flows of goods, services and capital
Savings and investements in an open economy
Exchange rates
THE THEORY OF ECONOMIC GROWTH: THE ECONOMY IN THE VERY LONG RUN
Capital accumulation
Population growth, the role of technical changes
Public policies to promote economic growth
THE THEORY OF BUSINESS CYCLES: THE SHORTH PERIOD
A review: IS-LM equilibrium in a close economy
Open economy: the Mundell-Fleming model with fixed and flexible exchange rates
Interest rates differentials and trade policies
MACROECONOMIC POLICIES
Stabilisation policies: active vs passive; rules vs discretion
Public debts: problems, measurements, evolution
Currency Areas and European monetary policies

SECOND PART
INTRODUCTION
Public financing and expenditures
Taxes: terminology and classification
Tax progressivity: definition and implementation
THE TAXATION SYSTEM: THEORETICAL AND INSTITUTIONAL FEATURES
Personal income tax
Corporate profits tax
Taxing financial rents (interests)
The taxation of consumption: taxing the added value
MAIN PUBLIC EXPENDITURE PROGRAMS: THEORY AND INSTITUTIONAL ASPECTS
The health system
Retirement and pensions: purposes, implementation and financing
Education and the financing of schooling systems (time permitting)
THE PUBLIC FINANCE DECISIONAL PROCESS IN ITALY
The State budget and the Finance Act (budget law)
The evolution of public debt in Italy: the dynamics of the State financial constraint


Pre-requisites
Economics

Teaching Material:
For the first part:
Mankiw N.G. – Taylor M. P., Macroeconomia, Zanichelli, Bologna, quinta edizione, 2009 (Review: Ch. 2, 3, 4, 9, 10, 11. New material, Ch. 5, 7, 8, 12, 14, 15, 16);

For the second part:
Roberto Artoni, Elementi di Scienza delle Finanze, Ed. Il Mulino, edizione 2010, (Ch. 1; 2 excluded par. 8 and 9.4; 3 excluded par. 7 and 8; 4 only par. 3; 5 excluded par. 8 and 9; 8; 9; 11 only par. 6; 12)

Paolo Bosi (ed.), Corso di scienza delle finanze, Ed. Il Mulino, edizione 2006 o 2010, (Ch. 7 – only the part on Education and the Welfare System)
Further material will be made available on Moddle a dedicated section.

Teaching methods:
Theory lectures and exercises.

Exams:
The exam is written, and it consists of both multimple choice and open questions. To sit the exam students have to follow the registration procedure. Only registered students can be admitted to the exam. Students can sit each of the two separate exams a maximum of three times during a year (starting from January 1st 2013). There is no oral examination.