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This Course Guide has been taken from the most recent presentation of the course. It would be useful for reference purposes but please note that there may be updates for the following presentation.
ECON A307
Public Finance
| Introduction |  |
Welcome to ECON A307 Public Finance.
ECON A307 Public Finance is a one-year, ten-credit, higher level course. This course has no prerequisites, but it would be an advantage to have basic knowledge in economics. If you have already completed the OUHK course ECON A230 Introduction to Economics (or ECON A231 Introduction to Microeconomics and ECON A232 Introduction to Macroeconomics) or an equivalent economics course before attempting this one, you should find the economic concepts used in this course very familiar. If you have not had any training in economics or if you want to refresh your economics concepts, you can consult the first five units of the SOSC A112C or ECON A230 course materials. Both of these courses are developed by the OUHK.
This course applies fundamental economic principles to help you understand and explain various economic issues related to public finance. The materials, textbooks and exercises are written in English, and you will need to have a good command of English in order to complete the course.
This course has ten units, which will take you 38 weeks to complete. You are expected to spend at least eight hours per week on the study materials. Throughout the course, you are also expected to work independently through the self-tests for each unit, to turn in five tutor-marked assignments on time, and to pass a three-hour examination.
Purpose of this Course Guide
As this course might be the first that you have taken through the Open University of Hong Kong (OUHK), you might not be aware of both the study skills required for distance learning and how OUHK courses are organized. If you have taken OUHK courses, you should be well aware of both of these things. Either way, however, it is recommended that you read this Course Guide thoroughly before looking at the study units or your textbooks.
This Course Guide tells you briefly what the course is about and how you can work your way through the courses. It suggests the amount of time you will likely need to complete the course and gives you a general idea when your tutor-marked assignments are due. For detailed information on assignments, however, please refer to the Assignment File. For information on the study schedule, tutorials and day schools, please refer to the Presentation Schedule.
In distance learning as practised by the OUHK, the study units are coordinated and prepared in the distance mode of education by a university academic team. You do not need to attend lectures face-to-face. This is one of the great advantages of distance learning: You can read and work through specially designed study material at your own pace, at times and places that suit you best.
Think of it as reading the lecture instead of hearing it from a lecturer but, in the same way that a lecturer might set you some reading to do, the study unit tells you when to read your textbook or other material. In the same way that a lecturer might give you an in-class exercise, your study unit has exercises (called various names) for you to do at appropriate points. You are also likely to find review questions throughout each unit. Do them all, as these exercises and questions give you the practice necessary to achieve the learning outcomes of the course and to pass the examination. Even when you 'make notes' in a direct face-to-face lecture, you are advised to study those notes and to read and think about them in relation to your textbook. In the distance mode of education, the course materials replace the 'live' lecture notes.
Course aims
This course aims to provide you with the concepts and theories you need to understand the essence of public finance. The focus of the course is on the expenditure and tax policies related to government budgeting. You are expected to learn about the theories and practices of optimal public finance policies, such as fiscal policy, debt policy and capital accumulation, and the provision of public goods, from the perspectives of efficiency and equity. The course also aims to provide you with a general understanding of policy design by government in certain important policy areas such as pension systems and health care financing. On successful completion of the course, you will be able to discuss the effectiveness of public finance policies from an international perspective.
This course emphasizes theoretical rigour and empirical relevance. Whenever possible, materials are presented in the context of Hong Kong, the United States or mainland China, so that you can apply the theories you learn in this course to current local and international fiscal situations and related issues.
Course learning outcomes
After completing this course, you should be able to:
Identify the major issues related to the role of the government in an economy.
List the major issues involved in expenditure and tax policies.
Apply theories and concepts to evaluate expenditure policies.
Apply the relevant theories and concepts to access the design of tax policies.
Evaluate tax policies from the perspectives of efficiency and equity.
Develop your own viewpoint about optimal debt policy and capital accumulation, and the provision of public goods.
Evaluate some important public policies such as pension provision, health care financing and environmental policy.
Evaluate the design of public finance policies in Hong Kong, the United States and mainland China.
| Course description | |
ECON A307 Public Finance has been designed to create a structured, yet stimulating, environment in which to learn the fundamental concepts related to this fascinating subject. The course includes the following topics, which are presented first in an overview. A brief description of each unit follows in the section entitled 'Course materials'.
Course overview
The following chart gives a general overview of the course structure.
(end of unit)Introduction: the public sector Externalities, public goods and political economy Economics of taxation I: taxation and efficiency Economics of taxation II: taxation and income distribution Economics of government expenditure The economics of social security and unemployment insurance The economics of health care financing and environmental protection Fiscal policy and stabilization The economics of public debt Topics in public finance: international issues and the federal system Revision TOTAL
Content of the study units
There are ten study units for this course. They are listed and briefly described below.
Unit 1 Introduction: the public sector
This introductory unit aims to introduce you to the subject matter of the course. In addition, public finance basics in Hong Kong, the United States and mainland China are outlined. This unit also provides a short introduction to the subject matter of each of the remaining units in the course.
Unit 2 Externalities, public goods and political economy
This is the most theoretical unit in this course. First, it outlines the theory of market efficiency. Then, it develops the theory of externalities and public goods, and discusses various policies to deal with externalities and public goods. Towards the end, this unit examines the political economy of policymaking, with reference to policies that deal with externalities and public goods.
Unit 3 Economics of taxation I: taxation and efficiency
This unit is the first of two units on taxation and deals with the positive aspects of taxation. After outlining the taxation system in Hong Kong with reference to those in the United States and mainland China, this unit discusses the concept of the costs of taxation. The (in)efficiency aspects of taxation are discussed, as is the theory of optimal taxation. This unit examines the question of who bears the tax burden ('tax incidence'). It also uses political economy theory to analyse the phenomenon of tax evasion.
Unit 4 Economics of taxation II: taxation and income distribution
This unit is the second of the two units on taxation. It deals with the normative aspects of taxation. It begins with a discussion of the progressivity of taxes, and follows with a discussion of the fairness of the taxation system. It then introduces you to the basic theory of income distribution and various measures of income inequality. The criteria of a good taxation system are listed. A few important taxes in Hong Kong, potential and actual, are evaluated according to these criteria.
Unit 5 Economics of government expenditure
This unit begins with an outline of the government and public expenditure in Hong Kong with reference to that in the United States and mainland China. The remainder of the unit comprises a detailed analysis of the cost-benefit principles underlying expenditure evaluation.
Unit 6 The economics of social security and unemployment insurance
This unit discusses two issues that cost a lot of government money in most countries: social security and unemployment insurance. It discusses the problems associated with social security and evaluates various solutions to the problems. The pension problem is specifically discussed, and the three common pension schemes are analysed in detail. This unit also discusses the unemployment problem and analyses the problems associated with unemployment insurance. The materials in this unit are presented with reference to the situations in Hong Kong, the United States and mainland China.
Unit 7 The economics of health care financing and environmental protection
This unit discusses two other issues that cost a lot of government money in most countries: health care and environmental protection. It discusses the problems associated with health care financing, and evaluates various solutions to the problems. It then discusses the problems associated with environmental protection, and evaluates various solutions to the problems. The materials in this unit are presented with reference to the situations in Hong Kong, the United States and mainland China.
Unit 8 Fiscal policy and stabilization
This unit begins with a general discussion of the theory of fiscal/stabilization policy. The problems with and limitations of this policy are analysed. Development policy is also discussed, as is its relationship with growth.
Unit 9 The economics of public debt
Debt financing is an important problem. This unit begins with a discussion of the financing problems associated with government spending and the problems of debt financing. A recent economic theory dismisses the relevance of public debts, and this unit examines this theory in some detail. The government surplus/deficit situations in Hong Kong and elsewhere are described. The unit then discusses the importance of financial prudence, and relates financial prudence to the linked exchange rate system in Hong Kong.
Unit 10 Topics in public finance: international issues and the federal system
This unit discusses two topics in pubic finance that do not fit into any of the earlier units: international issues and the federal system. It begins with a discussion of the theory of fiscal policy in an open economy context and then analyses the needs and complications of international fiscal coordination. Next, the unit explains the concept of fiscal federalism and examines the differential incentives of the central and local governments under fiscal federalism. The federalism systems in the United States and mainland China are discussed.
| Course delivery | |
Print media
Textbook
The compulsory textbook for ECON A307 is:
Rosen, H S and Gayer, T (2010) Public Finance, 9th edn, New York, NY: McGraw-Hill.
Readings
The main thread of our discussion follows the textbook, Public Finance, 9th edition. This textbook provides you with most of the background knowledge and fundamental economic concepts needed to analyse government decisions and policies. We will include additional reading materials in the course as necessary to develop a complete picture. You might also find the following references helpful in understanding various aspect of the subject matter.
References
The Other Hong Kong Report, various years, Hong Kong: The Chinese University Press, various years.
China Review, various years, Hong Kong: The Chinese University Press.
Hong Kong Annual Digest of Statistics 2006, Hong Kong: Census and Statistics Department, 2006.
Budget Speech, various years, Hong Kong: Census and Statistics Department, various years.
Non-print media
Internet
The following optional websites are helpful for studying this course:
http://www.info.gov.hk (the website of the Hong Kong SAR Government); and
- http://www.gpoaccess.gov/eop/ (the website of the Economic Report of the President of the United States)
Assignment File
Assignment details for this course are in your Assignment File. The nature of these assignments is described in the 'Tutor-marked assignments' section below. You are required to complete your assignments and send them by mail (along with a tutor-marked assignment form) to your tutor, in accordance with the timetable provided in the Presentation Schedule.
Presentation Schedule
The Presentation Schedule for this course is in your course package. In this schedule, you will see the approximate time that your tutor must receive your assignments. Please note that your must submit all of your assignments in time to reach your tutor by the dates shown in the Assignment File.
| How to work through the course material | |
You should pay particular attention to this Course Guide and all instructions in the study units. If possible, you should attend all of your tutorials, where you will meet other 'distance' learners.
Study units
You should read the study units carefully, as they guide your learning and tell you how to approach any assignment related to the unit. Otherwise, you may miss important information. You must read both the study units and the textbook -- they are not alternatives. Moreover, you should also read articles in newspapers and journals, and other books related to the topics. The more widely you read, the better your appreciation and understanding of the course.
Each unit is divided into a number of sections. The first section introduces the materials to be covered. The next sections constitute the contents of the study unit. These sections guide your learning and direct you to complete the self-tests. The final section contains the summary of the unit and answers to the self-test questions.
Non-assessed self-tests
You will come across non-assessed self-tests or activities in each study unit. These are designed to help you remember and apply what you have learned and to prepare for your tutor-marked assignments and the examination. The self-test questions give you immediate feedback on your understanding of the subject matter you have just learned. By answering these questions and referring to the suggested answers (at the end of each unit), you can check your progress accordingly. However, you should attempt all questions before referring to the answers.
Checking understanding
If you encounter any problems, please make notes and raise these problems with your tutor as soon as possible.
| Assessment | |
ECON A307 is assessed through two components: continuous assessment (i.e. assignments) and a three-hour final examination. This course is designed to help you progress easily from the required readings to the assignments and then to the examination. You will be required to apply the information and techniques learned during the course when doing the assignments.
The assignments consist of five TMAs (tutor-marked assignments). The TMAs must be submitted to your tutor for formal assessment in accordance with the deadlines stated in the Assignment File. The non-assessed self-test questions are not part of your formal assessment, but these should be done before progressing to the assignments.
Tutor-marked assignments
During the 40-week period of distance learning, the submission of five TMAs serves three purposes:
They provide a mechanism for you to keep up with your progress.
They test your understanding of the topics.
They also provide an opportunity for you to apply what you have learned by completing some applications work and case studies.
TMAs, after being marked by the assigned tutor, are returned to you so that you can be aware of your mistakes and clarify any misunderstandings. In addition, you can widen your perspectives through your tutor's feedback.
TMAs for this course generally consist of essay style questions, problem-solving programming exercises and case studies.
Of the five assignments, only the marks of the best four are counted in your overall continuous assessment score. The total continuous assessment score then contributes 50% to the total course mark.
How to do your assignments
For each assignment, please read through the questions and the instructions accompanying the questions in the Assignment File. Please read the questions carefully and make sure you understand what is required before attempting them.
Once you have completed each TMA, you must send it (with your TMA form) to your tutor. Please make sure that each assignment reaches your tutor on or before the deadline. However, if you cannot finish your assignment on time, you must contact your tutor before the deadline, to discuss the possibility of an extension. Your tutor may grant you an extension of up to seven days. If more time is needed, you must obtain approval from your Course Coordinator or the Dean of the School of Arts and Social Sciences. No marks will be awarded for any late assignments without prior approval from the Course Coordinator or the Dean. TMAs will not be marked after the deadline for the final assignment, unless prior approval has been obtained for submitting them late.
If your TMAs call on you to write a 'research-type' paper, you must be careful when you are using other references in the research for your TMAs. If you commit plagiarism, you will be penalized severely. Plagiarism is theft of someone else's work or ideas. This applies just as much to using the work of other students as it does to using the work of authors of books. However, you may include parenthetical references to the works you cite (e.g. Rosen and Gayer 2008, 38). So, you could include a section at the end of your TMAs called 'References' in which the full name, title, date and place of the publication appear.
The way to cite a reference is:
Rosen, H S and Gayer, T (2010) Public Finance, 9th edn, New York, NY: McGraw-Hill.
Note that the Course Overview table (shown earlier in this Course Guide) gives you an indication when your TMAs are due. For actual dates, please check your Presentation Schedule.
Examination
The final examination accounts for 50% of the total course marks. It will be held at the end of the course, and will be three hours long. It will contain short essay questions and covers materials from all units and datelines.
Final examination and grading
The final examination for this course will be three hours (closed book) and counts for 50% of your total course grade. You should use the time between finishing the last unit and the examination to review the entire course. You might find it useful to review your self-tests, assignments and your tutor's comments on them before the examination. You will be advised of examination arrangements after you send in your examination registration card.
The final examination covers information from all parts of the course and will be in a form you have already experienced in self-tests and assignments. The examination will not contain tricky questions. That would not be consistent with the clear, open approach that the OUHK takes to helping its learners succeed in their studies.
To earn a pass grade for the course, an overall mark of 40% or better is required. You must attain an average mark of 40% or better on the assignments and a mark of 40% or better on the final examination. You are therefore required to submit all assignments and to sit for the examination. If, for some good reason, you are not able to complete all assignments or sit for the examination, contact your Course Coordinator to see if other arrangements can be made.
| Student support | |
Tutors
Tutors conduct face-to-face non-compulsory tutorial sessions with a group of students (approximately 30) over the course presentation as per the tutorial schedule. At these sessions, key course concepts are reviewed and reinforced, group and individual exercises are conducted, topical issues are discussed, individual student questions are answered, and assistance is provided relative to assignments. Although attendance at tutorials is not compulsory, you are strongly encouraged to attend them.
Tutors also make themselves available for weekly telephone contact at a time and phone number arranged with their tutor groups. In addition to the tutorial work and telephone tutoring, tutors mark your assignments according to marking criteria provided by the academic coordinator of the course. Tutors are encouraged to provide comprehensive and timely feedback to you. Your academic coordinator is responsible for training the tutors, providing marking criteria, monitoring a sample of marked assignments and providing feedback to the tutors.
Tutorials and day schools
There will be 11 tutorials of two hours each, and two day schools, each lasting for three hours, for students of ECON A307 Public Finance. Tutorials are not compulsory but you are strongly urged to attend.
Online support
The OUHK School of Arts and Social Sciences will maintain a simple Web page for the course, which should provide links to the main government sites relevant to this course. Email tutoring support will also be provided whenever appropriate.
| How to get the most from this course | |
You are encouraged to put into practice the following strategies for working through the course:
Read this Course Guide carefully. Check the suggested study schedule and mark down important dates, such as the assignment due dates and tutorial dates. Try to keep up with the schedule and meet the dates.
Start the first study unit. Read the introduction and objectives of the unit. The objectives indicate the main topics and expectations for the unit.
Work through the unit. The unit suggests a sequence of study, but you can revise it to suit your own judgement and strategy.
Read the text, readings and datelines whenever the unit suggests you do so.
Attempt the exercises at the end of each section. Then check the answers given at the end of the unit, and read the discussions of the exercises.
Review the objectives for the unit to confirm that you have achieved them. Review the study materials and/or talk to your tutor if you are not sure that you have met the expectations.
Turn to your Assignment File and complete the assignment according to the instructions in the unit. Submit your work no later than the due date.
After you have turned in your assignment, do not wait. Start working on the next unit. Note that only in this way can you keep on schedule.
After your assignment has been marked and returned to you, read through it and pay particular attention to your tutor's comments and queries. Clarify any questions immediately by phoning your tutor.
After completing the last unit, review the entire course and prepare yourself for the final examination. Check again that you have met the course objectives and unit objectives.
You need to be regular in your study, because this is the way you can keep what you have learned fresh in your mind and keep on schedule. Note that time is tight but that time is in your own hands! You also need to be active in thinking, and always ask why. The exercises in the units will stimulate your thinking, but you also need to challenge yourself to further your understanding of the logic underneath the study materials.
| Conclusion | |
This course has been designed to introduce you to public finance. From the perspective of well-reasoned economic analysis, you will learn to understand the problems of government fiscal decisions and policies, and to evaluate the solutions to these problems.
We hope you enjoy studying this course and find it useful in developing your understanding of government decision-making and policies. You may find some units of the course easy, but some are likely to be more difficult and challenging. Although you have to depend on yourself to go through the course, assistance from the Open University is always available, and your tutor is ready to help.
We wish you every success!
| About the course developer | |
Pun Wing-chung received his MPhil in Economics at Columbia University. He taught in the economics department of The Chinese University of Hong Kong and Lingnan University. He has published economics articles in professional journals such as the Journal of Comparative Economics and the Journal of Theoretical Politics.
