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Fiscal policy: Remarks about teaching

material

These remarks concern the main material. The rest may still help for yourunderstanding. Note also you are expected to read Romers Chapter 11 on

Fiscal Policy [at least the relevant sections]

Chapter 1: Only the document

Ch1 Introduction PDF document.

This is the background but no model to know.

Chapter 2:

Ch 2 Ricardian Equivalence PDF document

Paper 2 Ghiglino&Shell[JET] PDF document

Know the model and all results and proofs except what is in the appendix.

Paper 4 Barro [JPE] PDF document

Only part I (stop at page 1110}

Chapter 3:

Ch 3 Tax smoothing PDF document

Chapter 4:

Ch 4 Social security PDF document

Ch 4b The retirement problem PDF document

In the last document stop reading at page 42.

Chapter 5:

Ch 5 Fiscal policy and inequality PDF document

All of it

Paper 5 Ghiglino & Venditti [JET] PDF document

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Know the model and the main result but not the proofs

Ch 5b Tax and redistribution PDF document

Until page 34. Based on Saez (RES).

saez-res PDF document

Only the parts that are useful to understand the parts before page 34 in above document should beconsidered. You can also use Diamond and Saez (Journal of Economic Perspectives (2011).

Chapter 6:

Ch 6 Economic Growth and Taxation PDF document

Whole of it! You can look on Barros book to help you.

Chapter 7:

Ch 7 Oil funds

Not in the exam:.

General remarks about the exam

The exam will consist of four questions, you will chose three of them. There are two types of things you

should know. The exam will have questions on both.

1) The economics of taxation and fiscal policy issues. These are contained in the lectures notes, the

papers and my talks during classes.

2) The models. You should know

a. The Ramsey model in continuous and in discrete time with a government.

b. The overlapping generation in pure exchange, no production but a government with lump-

sum taxes and with consumption taxes [my JET paper]

c. The Barro model with bequests [Do government bonds]

d. The Barro model (1979) of tax smoothing.

e. The Diamond model with a government and the social security issue.

f. The Saez (2001) model that is a simplified Mirrlees modelg. The expanding variety model with taxation

A typical exam question will be:

1) We consider the issue of reducing inequality when only consumption taxes are available

a. State some stylized facts about inequalities in OECD economies (eg. US or UK)

b. Explain why it might be good to reduce inequalities and what kind of negative effects we

might expect.

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c. Consider now the XX model seen in the lectures.

i. To simplify we assume that u= and and

ii. State the model and the equilibrium conditions.

iii. Find the steady state without taxes

iv. Analyse the effect of taxes on