Public Economics


The aim of the course is to deepen the understanding of the role of the state in modern economies. Main areas and tools of intervention, strengths and weaknesses of these interventions, are discussed from a microeconomic viewpoint.

General characterization





Responsible teacher

Paulo Côrte-Real


Weekly - Available soon

Total - Available soon

Teaching language



Mandatory Precedence:

- 1100. Principles of Microeconomics


Jonathan Gruber, Public Finance and Public Policy, Worth Publishers (recommended) António Pinto Barbosa, Economia Pública, McGraw Hill (additional) William Thomson (2007), Fair Allocation Rules, Rochester Center for Economic Research Working Paper 539. (additional)

Teaching method

Lectures: There are two weekly classes of 1:20, where I present and discuss the topics of the program illustrated where possible with examples; clarification of doubts and questions. At the end of each topic students make an oral presentation to the class with empirical data on the issues analyzed. These presentations are based on reports made in groups, as specified below

Weekly Tutorial: There is a 1:20 class with the Teaching Assistant with the aim of exploring some pecific topics through problem-solving.

Evaluation method

Regular Exam Period
1 Intermediate Test, weighting 25% on the final score. The test covers the contents given in lectures up to one week before the respective date. The realization of the test is mandatory.
-1 Group Report and oral Presentation: worth 20%, (10% for the report, 10% for the oral presentation). These pieces of evaluation are mandatory. More details on these reports will be made available in moodle.
Final exam: 55% (minimum of 8.5). Covers all the topics addressed in the course.
If a student misses one or more mandatory pieces of evaluation, the final score does not follow the rules defined above. Evaluation rules will then be set on a case by case basis by and may include an oral exam.

Resit Exam Period
As referred, the above-mentioned rules apply in the two exams, normal and re-sit.

Grade Improvement in Regular Period
The above-mentioned rules apply for grade improvement.

Grade Improvement in Re-sit Period
The above-mentioned rules apply in the two periods, regular and re-sit.

Subject matter

1-    Introduction:
a)    The role of the state in economics: efficiency, equity
b)    Theories of the Public Sector 2-Market failures and the role of the State
a)    Correction of externalitities
b)    Provision of Public goods
c)    Cost-Benefit Analysis 3.-Political economy
a)    Voting: Majority rule: Condorcet winner, median voter theorems, multidimensional voting, agenda manipulation
b)    Rent-seeking
c)    Theories of “government-failure” 4- The new functions of governments
a)    Education
b)    Social Insurance
a.    Theoretical background: Uncertainty and asymmetric Information
b.    Unemployment Insurance, Disability Insurance
c.    Pensions systems 5- Equity and redistribution
a)    Measuring inequality
b)    Measuring poverty 6- Taxation:
a)    Measuring the fairness of Taxes
b)    Tax Incidence; Optimal Taxation
c)    Consequences of taxation on efficiency: taxes and labor supply, taxes and savings
d)    Tax Reform


    Programs where the course is taught: