Public Economics

Academic year
Subject Area
Language of Instruction
Mode of Delivery
ECTS Credits
1st Cycle Studies

Recommended Prerequisites

A good knowledge of microeconomic concepts and tools is recommended.

Teaching Methods

The course is structured in lectures on each topic followed by problem solving and discussion of short texts and news from the press. Classroom games in which students make decisions and interact will also be used in order to enhance basic intuition of economic concepts. The active involvement of students in the analysis of practical problems will be emphasized.

Learning Outcomes

- Identify the key issues of Public Economics and be aware of the plurality of theoretical approaches to the study of public action in the economy

- Show the relevance of the public sector in a comparative international perspective

- Discuss the rationale for public action in the economy

- Analyze market failures and the public action in this domain

- Analyze the issue of social justice and the role of public policies aiming to promote equity

- Discuss, in a reasoned way, public issues and policies in the environmental and social domains

- Discuss the processes of collective choice and government failures

- Note the desirable characteristics of a tax system and show understanding of the principles of taxation.

Develop capacity for analysis and synthesis, oral and written communication, ability to use economic data to support and develop arguments; problem solving, development of critical and self-critical sense, ability to work autonomously and in group, and capacity to apply knowled

Work Placement(s)



I – Introduction

     I.1 – Public action in the economy

     I.2 – The relevance of the public sector: an international overview

II – Economic rationales for public action: market failures and failures of market outcomes

     II.1 – Market failures: the conventional and the institutionalist political economy perspectives

     II.2 – Externalities, social costs and the environment

     II.3 – Public goods and public provision

     II.4 – Information, uncertainty and social insurance

     II.5 – Social justice and the rationales for income redistribution

III – Collective choices and government failures

     III.1 – Public mechanisms for allocating resources

     III.2 – The “public interest” model and the “public choice” model of public action

     III.3 – Government failures

IV – Taxation systems

Head Lecturer(s)

Vítor Manuel Leite Neves

Assessment Methods

Periodic or by final exam as given in the course information: 100.0%


• BARR, Nicholas, Economics of the Welfare State, 5th edition, Oxford: Oxford University Press, 2012.

• CHANG, Ha-Joon, “Breaking the mould: an institutionalist political economy alternative to the neoliberal theory of the market and the state”, Cambridge Journal of Economics, 2002, 26, pp. 539-559.

• CULLIS, John ; JONES, Philip - Public finance and public choice : analytical perspectives. 3rd ed.. Oxford : Oxford University Press, 2009.

• STIGLITZ, Joseph E. e Jay K. Rosengard - Economics of the Public Sector, Fourth International Student Edition fourth edition, New York: W. W. Norton & Company, 2015.

(Supplementary readings will be provided in due course for secific topics)