JSGS 805 ECONOMICS FOR PUBLIC POLICY ANALYSIS

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1 JSGS 805 ECONOMICS FOR PUBLIC POLICY ANALYSIS UNIVERSITY OF SASKATCHEWAN CAMPUS INSTRUCTOR: M. Rose Olfert PHONE: OFFICE HOURS: By Appointment OFFICE LOCATION: DIEF 152 TERM: Term 1 ROOM: DIEF 137 DATE AND TIME: W 5:30 8:30pm, September 19 December 5 CALENDAR DESCRIPTION This course develops concepts in microeconomics (and to a limited extent, macroeconomics) that are instrumental in understanding and conducting public policy analysis. It is intended for students who have had limited prior exposure to economics. Though it is not a formal pre-requisite for JSGS 802, the latter assumes the student has successfully completed JSGS 805. COURSE CONTENT AND APPROACH The purpose of this course is to provide an economic framework for the analysis of public policy. The course uses microeconomic concepts to examine when and how the government should intervene in the economy and the consequences of that intervention. More limited macroeconomic concepts are presented. The course pays particular attention to how people and firms behave and how they are likely to respond to policy interventions. The course also develops the key concepts associated with cost-benefit analysis and shows how these concepts are used in the analysis of public policy. REQUIRED READINGS Textbook: Weimer, David L. and Aidan R. Vining Policy Analysis. Longman. ISBN: SUPPLEMENTARY READINGS Murray Fulton Class Notes. Electronic version on PAWS. Krugman, Paul, Robin Wells and Anthony Myatt Microeconomics. New York: Worth Publishing. OR any standard Introductory Economics textbook.

2 COURSE OUTLINE AND ASSIGNMENTS 1. Introduction Policy as intervention (Sept. 19) Readings: Weimer and Vining, Ch. 1-3 Banks, Gary Markets: how free? Australian Productivity Commission. data/assets/pdf_file/0005/94433/ markets-how-free.pdf Krugman ch. Introduction and ch. 1, Behavioural relationships The Basis of a Market Economy Supply and demand, economic fundamentals; elasticity (Sept. 26) Readings: Krugman, ch. 3, 5; Appendix to Ch 2 (essential for graphs) Fulton, M. class notes Underpinnings of D&S; Welfare Measures, consumer and producer surplus (Oct. 3) Readings: Weimer and Vining, ch. 4 Krugman, chs. 6, Bases for government intervention in a market economy Public Goods, Externalities and Natural Monopoly (Oct. 10) Readings: Weimer and Vining, Ch. 5 Krugman, ch. 19, 20 Shiell, L. and S. Loney Global Warming Damages and Canada's Oil Sands. Canadian Public Policy 33(3): Asymmetric Information, Limited Competition, Distributional Goals (Oct. 17) Readings: Weimer and Vining, chs. 5-7 Krugman, chs. 14, 21 Akerlof, GA The Market for Lemons. Quarterly Jour. Econ. 84(3): Macroeconomic performance, Labour markets, Regional distribution (Oct. 24) Readings: Krugman, ch. 2, 12 Fortin, N., DA Green and T Lemieux Canadian Inequality: Recent Developments and Policy Options. Can. Pub. Policy 38(2): Finnie, R and I Irvine The Redistributional Impact of Canada s Employment Insurance Program, Can. Pub. Policy 37(2): Forms of Government Intervention Taxes and Subsidies (Oct. 31) Readings: Krugman, ch. 4 Weimer and Vining, ch. 10 Taxes: Mintz, J. and N. Olewiler A Simple Approach for Bettering the Environment and the Economy:Restructuring the Federal Fuel Excise Tax. Sustainable Prosperity, U. of Ottawa: Ottawa Subsidies: Dalby, B A Framework for Evaluating Provincial R&D Tax Subsidies. Canadian Public Policy 31(1):

3 Service Provision, Regulation and Standards (Nov. 14) Weimer and Vining, ch. 10, 17 Government Provision of Services Agricultural R&D Nagy, J.G. and W.H. Furtan Economic Costs and Returns from Crop Development Research: The Case of Rapeseed Breeding in Canada. Can. J. of Ag. Economics 26: Regulations and Standards: Sen, A. and B. Mizzen Estimating the Impact of Seat Belt use on Traffic Fatalities: Empirical Evidence from Canada. Canadian Public Policy 33(3): Rabkin, D. and T. Beatty Does VQA Certification Matter: A Hedonic Analysis. Canadian Public Policy 33(3): Government Failures Capture and Pork-barreling (Nov. 21) Readings: Weimer and Vining, chs. 8, 13 Helm, Dieter Government Failure, Rent-Seeking and Capture: The Design of Climate Change Policy. Oxford Review of Economic Policy 26(2): Flyvbjerg, Bent Survival of the Unfittest: Why the Worst Infrastructure Gets Built-- And What We Can Do about It. Oxford Rev. of Econ. Policy 25(3): Benefit-Cost analysis (Nov. 28 and Dec 5) > Net Present Value discounting and real values > Opportunity Cost > Valuation of without market prices > Internal rate of return > Misuses of multipliers > Uncertainty Readings: Weimer and Vining, ch. 16 Jenkins, G., Chun-Yan Kuo and A. Ozbafli Cost-Benefit Analysis Case Study on Regulations to Lower the Level of Sulphur in Gasoline. Dept. of Econ. Queen s University. Treasury Board of Canada Benefit-Cost Analysis Guide. Ottawa. Boardman, A.E., M.A. Moore, and A.R. Vining The Social Discount Rate for Canada Based on Future Growth in Consumption. Can. Public Policy 36(3): Boardman, A.E., C. Laurin, M.A. Moore, and A.R. Vining A Cost-Benefit Analysis of the Privatization of Canadian National Railway. Can. Public Policy 35(1): Ferrara, I., S. McComb, and P. Missios Local Willingness-to-Pay Estimates for the Remediation of the Sydney Tar Ponds in Nova Scotia. Can. Pub. Policy 33:

4 LECTURE SCHEDULE Sept 19 Sept 26 Oct 3 Oct 10 Oct 17 Oct 24 Oct 31 Nov 7 Nov 14 Nov 21 Nov 28 Dec 5 Introduction: Policy as Intervention The Market Economy Fundamentals Underpinnings of Demand and Supply, Welfare Measures Govt. Intervention: Public Goods, Externalities and Natural Monopoly Govt. Intervention: Asymmetric Information, Limited Competition, Distributional Goals Govt. Intervention: Macroeconomic performance, Labour markets, Regional distribution Forms of Intervention: Taxes and Subsidies Mid-term test Forms of Intervention: Service Provision, Regulation and Standards Government Failures Cost-Benefit Cost-Benefit IMPORTANT DATES Problem Sets: Due Dates: #1: Demand and Supply, Consumer and Producer Surplus Wed. Oct. 10, 2012 #2: Externalities, Taxes and Subsidies Wed. Nov. 14, 2012 Mid-Term Test: Wed. Nov. 7, 2012 Major Assignment: Wed. Dec. 5, 2012 EVALUATION 2 Problem Sets 20% Mid Term Test 20% Major Assignment 20% Final Exam 40% Total 100% LATE ASSIGNMENTS Assignments must be submitted by the due date. Exceptions can only be made when there are documented medical reasons or extraordinary circumstances. ATTENDANCE AND PARTICIPATION You are expected to attend every lecture and participate actively by paying attention, asking/answering relevant questions, and sharing your comments, observations, and thoughts on relevant topics. If you are unable to attend a lecture due to documented medical reasons or extraordinary emergencies, please advise the instructor beforehand.

5 GRADE DESCRIPTORS 85+ excellent A superior performance with consistent strong evidence of: a comprehensive, incisive grasp of the subject matter; an ability to make insightful critical evaluation of the material given; an exceptional capacity for original, creative and/or logical thinking; an excellent ability to organize, to analyze, to synthesize, to integrate ideas, and to express thoughts fluently; and an excellent ability to apply theories to real-world problems and intersect with related disciplines very good An excellent performance with strong evidence of: a comprehensive grasp of the subject matter; an ability to make sound critical evaluation of the material given; a very good capacity for original, creative and/or logical thinking; an excellent ability to organize, to analyze, to synthesize, to integrate ideas, and to express thoughts fluently; and a strong ability to apply theories to real-world problems and intersect with related disciplines good A good performance with evidence of: a substantial knowledge of the subject matter; a good understanding of the relevant issues and a good familiarity with the relevant literature and techniques; some capacity for original, creative and/or logical thinking; a good ability to organize, to analyze, and to examine the subject material in a critical and constructive manner; and some ability to apply theories to real-world problems and intersect with related disciplines satisfactory A generally satisfactory and intellectually adequate performance with evidence of: an acceptable basic grasp of the subject material; a fair understanding of the relevant issues; a general familiarity with the relevant literature and techniques; an ability to develop solutions to moderately difficult problems related to the subject material; and a moderate ability to examine the material in a critical and analytical manner.

6 STUDENTS WITH SPECIAL NEEDS U OF S: Students in this course who, because of a disability, may have a need for accommodations are encouraged to discuss this need with the instructor and to contact Disability Services for Students (DSS) at ACADEMIC INTEGRITY AND CONDUCT U OF S: Understanding and following the principles of academic integrity and conduct as laid out in the University of Saskatchewan s Guidelines for Academic Conduct is vital to your success in graduate school (available at Ensuring that your work is your own and reflects both your own ideas and those of others incorporated in your work is important: ensuring that you acknowledge the ideas, words, and phrases of others that you use is a vital part of the scholarly endeavour. If you have any questions at all about academic integrity in general or about specific issues, contact any faculty member and we can discuss your questions.