Public Finance

Code:

D202

Acronym:

FINP

Keywords
Classification	Keyword
OFICIAL	Legal Sciences

Instance: 2006/2007 - A

Active?	Yes
Course/CS Responsible:	Law

Cycles of Study/Courses

Acronym	No. of Students	Study Plan	Curricular Years	Credits UCN	Credits ECTS	Contact hours	Total Time
D	197	Official Study Plan - LD	2	-	13	-

Objectives

The main aim of the discipline is to provide the students with the arguments and the scientific contents that allow them to critically understand the intervention of the government in the economy and the associated juridical consequences. The students shall understand the scientific arguments that justify the strong weight of the state in democracies, the interaction between public economics and politics and its influence on the public budget, in terms of expenditure and tax revenues. One additional goal is the perception of the links that embody individual choice and public choice and the shape of institutions.

Program

I – Public Finance
1 – The economics of private sector and public economics
2 – The intervention of the state in the economy and its juridical consequences – the Financial Law
3 - Politics and public choice

II – State intervention and state budget
1 – Why does the state interfere with markets?
1.1 – Normative foundations of state intervention: efficiency; equity; stabilization
1.2 – Positive foundations of state intervention: “the prisoner dilemma”
1.3 – The functions of the state and Musgrave´s classification of autonomous budgets
2 – The Budget of Public Administration
2.1 – Notion and functions of the Public Budget
2.2 .- The sub-sectors of Public Administration
2.3 – Budget principles, rules and the notion of equilibrium
2.4 – Drawing up and approval of the Budget
2.5 – Executing the Budget and closing the Accounts
2.6 – Parliamentary auditing of the Budget and Accounts
2.7 – The problem of “invisible” public intervention

III – The functions of the State
1 – Indicators of public intervention
2 – Resources allocation: The theory of public goods and externalities
3 - Income distribution: The theory of redistribution
4 – Macroeconomic stabilization
4.1 – Macroeconomic effects of public expenditure and taxes
4.2 – The multiplier and accelerator principles
4.3 – The propulsion effect of public finance
4.4 – Stabilization policies
5 – The growing of public expenditure and the Welfare-State

IV – Taxation
1 – Patrimonial revenues and taxes
2 – Indicators of public revenues
3 – The tax system
3.1 – Principles of the tax system
3.2 – Measures of fiscal capacity
3.3 – Income Tax versus a General Tax on Consumption
3.4 – The equivalence of taxes
4 – The theory of tax incidence
4.1 – Legal incidence versus economic incidence
4.2 – Partial equilibrium versus general equilibrium tax incidence
4.3 – Tax neutrality and the welfare costs of taxation
5 – Taxes
5.1 – Personal income tax
5.2 – Corporate income tax
5.3 – Sales tax and Value Added Tax (V.A.T)
5.4 – Social Security contributions
6 – The problem of tax evasion

V – The Budget Constraint of the State
1 – The long-run constraint
2 – The short-run constraint
2.1 – The budget balance and the “golden rule” of equilibrium
2.2 – Public debt and intergenerational equity
2.3 – Should the deficit be reduced?
2.4 – Budget balance and stabilization policy
2.5 – A positive approach to public debt

VI – Politics and Public Choice
1 - Democracy and public choice
2. – Voting rules and public choice
3 – The influence of politics in government revenues and expenditure
3.1 – The political power of majority: the dictatorship of median voter
3.2 – The political power of bureaucracy
3.3 – The political power of minorities: the lobbying of interest groups
3.4 – Information asymmetries and fiscal illusion
4 – Democracy and the growing of public sector
5 – Why voters vote?

VII – Fiscal Federalism
1 – Arguments in favour of decentralization
2 – The functions of different levels of government
3 – The Tiebout model
4 – Spillovers of costs and benefits
5 – Intergovernamental transfers and local taxes

Main Bibliography

BACELAR GOUVEIA, Jorge, 2004, “Legislação de Direito Financeiro”, 4th edition (1st edition – 1999), Almedina, Coimbra.
BARBOSA, António S. Pinto,1997; “Economia Pública”, McGraw-Hill, Portugal.
BROWNING, Edgar e BROWNING, Jacqueline, 1994; “Public Finance and the Price System”, 4th edition, 1st edition in 1979, Prentice Hall, Inc., New Jersey, USA.
CAVACO SILVA, Aníbal e CÉSAR DAS NEVES, João, 1992; “Finanças Públicas e Política Macroeconómica”, 2nd edition (1st edition – 1982), Universidade Nova de Lisboa.
CULLIS, John e JONES, Philip, 1998; “Public Finance and Public Choice”, 2nd edition, 1st edition in 1992, Oxford University Press, UK
MUSGRAVE, Richard e MUSGRAVE, Peggy, 1989, “Public Finance in Theory and Practice”, 6th edition, originally published in 1959; McGraw-Hill, Book Company.
PEREIRA, P.; Afonso, A.; Arcanjo, M.; Santos, J., 2005, "Economia e Finanças Públicas", Escolar Editora.
ROSEN, Harvey, 1999; “Public Finance”; 5th edition, MacGraw-Hill, USA.
SOUSA, Domingos P., 1990, “Finanças Públicas”, Instituto Superior de Ciências Sociais e Políticas, Lisboa.
SOUSA FRANCO, António, 1999; “Finanças Públicas e Direito Financeiro”, 4th edition (1st edition – 1980), Almedina, Coimbra.
TEIXEIRA RIBEIRO, José Joaquim, 1997, “Lições de Finanças Públicas”, 5th edition, Coimbra Editora.

Complementary Bibliography

ÁGUILA, Rafael, 2003, “Manual de Ciência Política”, 3th edition (1st edition – 1997), Editorial Trotta, Espanha.
ATKINSON, Anthony e STIGLITZ, George, 1987; “Lectures on Public Economics”, 2nd edition,1st edition in 1980, New York: McGraw-Hill Book Company.
BUCHANAN, James, 1988; “The Economic Theory of Politics Reborn”, Challenge, vol 31 nº 2, p. 4 – 10.
BUCHANAN, James e MUSGRAVE, Richard, 1999; “Public Finance and Public Choice: Two Contrasting Visions of the State”, Massachusetts Institute of Technology (MIT), MIT Press, USA.
CABRAL, Nazaré, 2005, "O Orçamento da Segurança Social - Enquadramento da Situação Financeira do Sistema de Segurança Social", ISBN: 972-40-2513-6, Coimbra.
CASTANHEIRA NEVES, Maria, 2004, “Governo e Administração Local”, Coimbra Editora.
CHAFFLON, Bernard e WEBER, Luc, 1984; “Le Financement du Secteur Public”, PUF.
COASE, Ronald, 1960, “The Problem of Social Cost”, Journal of Law and Economics, vol. 3, October, pág. 1-44.
CORDES, Joseph, 1997; “Reconciling Normative and Positive Theories of Government”, The American Economic Review, vol. 87 nr 2, p. 169 – 172.
CRUZ, José Neves; 1998, Análise Económica da Procura no Mercado Político: Quem Determina as Escolhas Públicas: Eleitores ou Grupos de Interesse?”, Edições Vida Económica, Porto.
GAMEIRO, António R., 2004; “O Controlo Parlamentar das Finanças Públicas em Portugal”, Almedina, Coimbra.
LAFFONT, Jean-Jacques, 1988, “Fondments de L´Economie Publique:Cours de Théorie Microéconomique”, 2nd edition, Economica.
MARCHAND, Christophe, 1999; “Économie des Interventions de L´Etat: Théorie des Choix Publics”, “Que sais-je ?”, PUF.
MCNUTT, Patrick, 2002, “The Economics of Public Choice”, 2nd edition, Edward Elgar, U.K.
MOSER, Peter, 2000, “The Political Economy of Democratic Institutions”, The Locke Institute, Edward Elgar, U.K.
MUELLER, Dennis, 2003; “Public Choice III”, Cambridge, Cambridge University Press.
NABAIS, José C., 2003, “Direito Fiscal”, Almedina.
PERDOMO, Óscar Bergasa, 2001, “Economia Pública Moderna”, Ediciones Pirámide, Madrid
PIERCE, David W. e Turner, R. Kerry, 1990, “Economia de los Recursos Naturales y del Medio Ambiente”, Celeste Ediciones.
PIGOU, Arthur, 1920; “La Economia del Bienestar”, Aguilar, Madrid 1946;
PRIETO, Luís, 2004, “Derecho Financeiro y tributário – Parte generale”, ISBN – 84-9767-460-x
OECD publications, Report from Banco de Portugal, World Bank Reports; several publications of INE and informations from the site of the Exchequer. “Livro Branco da Segurança Social”, 1995, and internet site of Social Security Ministry.

Teaching methods and learning activities

Theoretical classes: Exposition of the contents of the discipline with the support of graphics from economics; application of game theory, use of case-studies based on information published in the media.
Practical classes: The students have to solve exercises of Financial Law and of Tax Law.

Software

None

Evaluation Type

Distributed evaluation with final exam

Eligibility for exams

The marks the student must get have to be equal or higher than 10, in a scale of [0,20] in one of the following hypotheses:
a)Average between the two examinations (“frequencies”);
b)Oral examination (if the student obtained in a) a mark between 7 and 9);
c)Written final examination;
d)Oral final examination (if the student obtained in c) a mark between 7 and 9.

Calculation formula of final grade

Are the marks obtained in the examinations referred in “Frequency Attaining” a), b), c) or d).

Examinations or Special Assignments

None

Special assessment (TE, DA, ...)

General Law and rules enforced in FDUP.

Classification improvement

Is obtained by doing a written or an oral examination

Observations

All examinations include theoretical and practical components.