Economic Analysis of Public Policy

Welcome to ECON A318 Economic Analysis of Public Policy.

ECON A318 Economic Analysis of Public Policy 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 the HKMU 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 economic concepts, you can consult the first five units of the SOSC A112C or ECON A230 course materials. Both of these courses are developed by HKMU.

This course applies fundamental economic principles to help you understand and explain various economic issues related to specific public policies on social security, unemployment, health care, environmental protection, education, as well as fiscal policies and public debts. 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 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 two 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 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 textbooks.

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 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 (i.e. self-tests and activities) 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 that you will need to analyse public policies from an economic perspective. The focus of the course lies in policies on social security, unemployment, health care, environmental protection, education, as well as fiscal policies and public debt.  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, health care financing and education. 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:

• Identify the major issues related to the role of the government in an economy.
• Discuss the major issues involved in important public policies including social security, unemployment insurance, health care financing, environmental protection and education.
• Acquire the theories and concepts and also evaluate the aforementioned public policies.
• Evaluate fiscal, stabilization, and development policies.
• Develop your own viewpoints about optimal debt policy.
• Evaluate some important public policies such as pension provision, health care financing and environmental policy.
• Compare the design of public policies in Hong Kong and the United States.

ECON A318 Economic Analysis of Public Policy 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 'Contents of the study units'.

Course overview

The following chart gives a general overview of the course structure.

Content of the study units

There are five study units for this course. They are listed and briefly described below.

Unit 1 The economics of social security and unemployment insurance

This unit discusses two areas on which a lot of government money is spent in most countries: social security and unemployment insurance. It discusses the problems associated with social security and evaluates various solutions to these problems. The pension problem is specifically discussed, and the three common pension schemes are analysed in detail. This unit also discusses unemployment and analyses the problems associated with unemployment insurance. The materials in this unit are presented with reference to the situations in Hong Kong and the United States.

Unit 2 The economics of health care financing and environmental protection

This unit discusses two other areas on which a lot of government money is spent in most countries: health care and environmental protection. It discusses these problems associated with health care financing, and evaluates various solutions to these problems. It then discusses the problems associated with environmental protection, and evaluates various solutions to these problems. The materials in this unit are presented with reference to the situations in Hong Kong and the United States.

Unit 3 The economics of education

This unit discusses another area on which a lot of government money is spent in most countries: education. The unit begins with an outline of the current education system in Hong Kong, with reference to that in the United States. It discusses a fundamental issue: why the government should intervene in the education market. It then explains the problems with the public education system, discusses results from various empirical studies and concludes by introducing education reforms and various solutions to the problems raised.

Unit 4 Fiscal policy and stabilization

This unit begins with a general discussion of the theory of fiscal/stabilization policy. The problems with and limitations of these types of policy are analysed. Development policy is also discussed, as is its relationship with growth.

Unit 5 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 debt, and this unit examines this theory in  detail. The government surplus/deficit situations in Hong Kong and the United States are described. The unit then discusses the importance of financial prudence, and relatesfinancial prudence to the linked exchange rate system in Hong Kong.

Print media

Textbook

The compulsory textbook for ECON A318 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. You may be instructed in the study units to read articles or other supplementary materials. These will be available online or provided as hard copies at the backs of the study units. For online readings, instead of typing in the URL, you can click the link in the online study unit provided in the HKMU's Online Learning Environment.

E-Library E-Reserve readings

You may be instructed to read articles in the E-Library E-Reserve. To read these items, go to the HKMU E-Library and click E-Reserve. Log in, click Accept/Agree on the Copyright Restrictions page, fill in the Course Code box, and click Search.

References

You may also find the following references helpful in understanding various aspect of the subject matter.

Budget Speech (Various years),Hong Kong: Census and Statistics Department.

China Review (Various years), Hong Kong: The Chinese University Press.

China Statistical Yearbook (Various years), Beijing: China Statistics Press.

Gross Domestic Product 1961 to 1999, Hong Kong: Census and Statistics Department, 2000.

The Other Hong Kong Report (Various years), Hong Kong: The Chinese University Press.

HKSAR Census and Statistics Department website: http://www.censtatd.gov.hk/

US Bureau of Economic Analysis website: http://www.bea.gov/

Non-print media

Internet

The following optional websites are helpful for studying this course:

• http://www.gov.hk/tc/residents/ (the website of the Hong Kong SAR Government)
• http://www.yearbook.gov.hk (the website of Hong Kong Yearbook)
• https://www.govinfo.gov/app/collection/ERP (the website of the Economic Report of the President of the United States)
• http://www.un.org/en/ (the website of the United Nations).

Assignment File

Assignment details for this course are in your Assignment File. The nature of these assignments is described in the 'Assignments' section of this Course Guide. You are required to complete your assignments and submit them via the Online Learning Environment (OLE) in accordance with the timetable provided in the Presentation Schedule.

Presentation Schedule

The Presentation Schedule is available on the OLE. It gives dates for completing assignments, attending tutorials, day schools, and so on.

You should pay particular attention to this Course Guide and all instructions in the study units. You should attend all of your 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 A318 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 knowledge and techniques learned during the course when doing the assignments.

The assessment consist of two assignments. The assignments 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 two assignments serves three purposes:

1. They provide a mechanism for you to keep up with your progress.
2. They test your understanding of the topics.
3. They also provide an opportunity for you to apply what you have learned by completing some applications work and case studies.

After being marked by the assigned tutor, 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.

Assignments for this course generally consist of essay style questions, problem-solving programming exercises and case studies.

You are required to complete both assignments. Each assignment counts for 25% of your final grade. 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 assignment, you must submit it via the OLE. Please ensure you do this 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). So, you could 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 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.

Final examination and grading

The final examination for this course will be two 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 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 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 six two-hour tutorials and one three-hour day school provided for students of ECON A318 Economic Analysis of Public Policy. 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 as well as fellow students. 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:

1. 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.
2. Start the first study unit. Read the introduction of the unit. The introduction indicates the main topics and expectations for the unit.
3. Work through the unit. The unit embodies a suggested sequence of study, but you can revise it to suit your own judgment and strategy.
4. Read the textbook, readings and datelines whenever the unit suggests you do so.
5. 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.
6. Review the introduction of the unit to confirm that you have achieved the expectations of the unit. Review the study materials and/or talk to your tutor if you are not sure that you have met the expectations.
7. 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.
8. 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.
9. 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.
10. After completing the last unit, review the entire course and prepare yourself for the final examination. Check again that you have met the course learning outcomes.

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 the economic analysis of public policy. From the perspective of well-reasoned economic analysis, you will learn to understand the problems of government policies and fiscal decisions, 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 HKMU is always available, and your tutor is ready to help.

We wish you every success!

Dr Fred Ku is a lecturer in the CUHK Business School, and the Associate Director of the Programme for Economic Education, Hong Kong Institute of Asia-Pacific Studies (HKIAPS). Dr Ku received both his undergraduate degree and PhD in Economics from the Hong Kong University of Science and Technology. His research interests include industrial organization, business strategy and technology-supported pedagogy. Dr Ku is dedicated to facilitating high-quality economics education in both tertiary and secondary education through developing teaching cases and organizing workshops.