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 A317
Theory of Public Finance
Welcome to ECON A317 Theory of Public Finance.
ECON A317 Theory of Public Finance is a one-semester, five-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 HKMU courses 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 economic concepts, you can consult the first five units of SOSC A112, which is also developed by HKMU.
This course applies fundamental economic principles to help you understand and explain various economic issues related to public finance. The materials, textbook 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 five units, which will take you 16 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 your assignments on time, and to pass a two-hour examination.
Purpose of this Course Guide
As this course might be the first that you have taken through Hong Kong Metropolitan University (HKMU), you might not be aware of both the study skills required for distance learning and how HKMU courses are organized. If you have taken HKMU 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 textbook.
This Course Guide tells you briefly what the course is about and how you can work your way through the course materials. It suggests the amount of time you will likely need to complete the course and gives you a general idea of when your 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 HKMU, 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 will need to understand the essence of public finance. You are expected to learn the implications for government policies with respect to externalities and the provision of public goods from the perspectives of efficiency and equity. The course also aims to provide you with a theoretical framework for taxation policy and how taxes should be levied to enhance economic efficiency and to promote a fair distribution of income. Also, you are expected to be able to discuss related local and international issues by employing the theories you have learned.
Course learning outcomes
After completing this course, you should be able to:
ECON A317 Theory of 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 'Content of the study units'.
Course overview
The following table gives a general overview of the course structure.
| Unit | Title | Weeks of study | Assessment activity (end of unit) |
| 1 | Introduction: the public sector | 2 | |
| 2 | Externalities, public goods and political economy | 4 | Assignment 1 |
| 3 | Economics of taxation I: taxation and efficiency | 3 | |
| 4 | Economics of taxation II: taxation and income distribution | 3 | Assignment 2 |
| 5 | Economics of government expenditure | 3 | |
| Revision | 1 | ||
| Total | 16 |
Content of the study units
There are five 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 whole course as well as outline the public finance in Hong Kong and the United States. 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 unit outlines the theory of market efficiency. Then, it develops the theory of externalities and public goods, and discusses implications of various policies with respect to externalities and public goods. With reference to these policies, this unit concludes by examining the political economy aspect of policymaking.
Unit 3 Economics of taxation I: taxation and efficiency
This unit is the first of the two-chapter series on taxation, and it deals with the efficiency aspects of taxation. After outlining the taxation system in Hong Kong and the United States, this unit discusses the welfare costs of taxation. This unit also examines the question of who bears the tax burden ('tax incidence') and analyses the phenomenon of tax evasion.
Unit 4 Economics of taxation II: taxation and income distribution
This unit is the second of the two-chapter series on taxation and deals with the equity aspects of taxation. It begins with a discussion of the progressivity of taxes, followed by a discussion of the fairness of the taxation system. It then introduces you to the basic theory of income (re)distribution, the measures of income inequality, and the optimality of different taxes. It concludes by introducing the criteria of a good taxation system and discusses possible ways to broaden the tax base of Hong Kong.
Unit 5 Economics of government expenditure
This unit begins with an outline of the government and public expenditure in Hong Kong and the United States. The remainder of the unit comprises a detailed analysis of the cost-benefit principles underlying expenditure evaluation. Concepts including present value, discount factor, and social discount rate are introduced and principles such as present value criteria, internal rate of return, and benefit-cost ratio are used to evaluate public projects and policies.
Print media
Textbook
The compulsory textbook for ECON A317 is:
Rosen, H S and Gayer, T (2014) Public Finance, 10th edn, New York, NY: McGraw-Hill.
Readings
The main thread of our discussion follows the textbook, Public Finance, 10th 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 aspects of the subject matter.
References
Budget Speech (various years), Hong Kong: Census and Statistics Department.
Hong Kong (various year), Hong Kong: Information Services Department of the Hong Kong SAR Government.
The Other Hong Kong Report (various years), Hong Kong: The Chinese University Press.
Non-print media
Internet
The following optional websites are helpful for studying this course:
Assignment File
Assignment details for this course are in your Assignment File. The nature of these assignments is described in the 'Assignments' section below. You are required to complete your assignments and submit them via the OLE, in accordance with the timetable provided in the Presentation Schedule.
Presentation Schedule
The Presentation Schedule for this course is available on the OLE. In this schedule, you will see the approximate time that your tutor must receive your assignments. Please note that you must submit all of your assignments in time to reach your tutor by the dates shown in the Assignment File.
You should pay particular attention to this Course Guide and all instructions in the study units. If possible, you should attend all the tutorials, where you will meet your tutor and 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 understanding and appreciation 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 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.
ECON A317 is assessed through two components: continuous assessment (i.e. assignments) and a two-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 knowledge and techniques learned during the course when doing the assignments.
There are two assignments for this course. These 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.
Assignments
During the 16-week period of distance learning, the submission of the two assignments serves three purposes:
After being marked by the assigned tutor, the assignments 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.
The assignments for this course generally consist of essay-style questions, problem-solving programming exercises and case studies.
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 assignment, you must submit it via the OLE. Please make sure that each assignment is submitted 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. Assignments will not be marked after the deadline for the final assignment, unless prior approval has been obtained for submitting them late.
If your assignments call on you to write a 'research-type' paper, you must be careful when you are using other references in the research for your assignments. 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 2014, 38). In this case, you need to include a section at the end of your assignments 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 (2014) Public Finance, 10th edn, New York, NY: McGraw-Hill.
Note that the Course Overview table (shown earlier in this Course Guide) gives you an indication of when your assignments 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 two hours long. It will contain short essay questions and covers materials from all units and datelines.
| Assessment type | Marks (in percentage) |
| Two assignments | 25% x 2 = 50% |
| Examination | 50% |
| Total | 100% |
Final examination and grading
The final examination for this course will be two hours long (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 HKMU 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.
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 tutorial groups. In addition to the tutorial work and telephone tutoring, tutors mark your assignments according to marking criteria provided by the Course Coordinator. Tutors are encouraged to provide comprehensive and timely feedback to you. The Course 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 6 two-hour tutorials provided for students of ECON A317 Theory of Public Finance. Tutorials are not compulsory but you are strongly urged to attend.
Online support
This course is supported by the Online Learning Environment (OLE). You can find course materials and the latest course information from the OLE. Through the OLE, you can also communicate with your tutors, the Course Coordinator and fellow students, as well as submit assignments. For details about the OLE and how to access it, please refer to the Online Learning Environment User Guide.
You are encouraged to put into practice the following strategies for working through the course:
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.
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 Hong Kong Metropolitan University is always available, and your tutor is ready to help.
We wish you every success!
Dr Fred Ku Kei Tat obtained his PhD in Economics from the Hong Kong University of Science and Technology in 2010. He specializes in industrial organization and business strategy. Dr Ku is currently an instructor in the Chinese University of Hong Kong, where he lectures on economics and statistics and has won a number of teaching awards.
