Public finance defined and importance of the study of the public finance, need for the public sector, main functions of the public sector (allocation, distribution and stabilization).
- The Role of the State
Pareto efficiency versus alternative criteria, equity and efficiency, defining a social welfare function, alternative theories of the role of the state, vertical equity and horizontal equity, redistribution and its effects, the Lorenz curve.
- The Theory of Public Goods
Public versus private goods, the theory of pure public goods, pure public goods, semi public goods and merit goods, free rider problem, the externalities and public policy.
- Tax and Tax Revenue
Types of taxes, the five desirable characteristics of a tax system, tax incidence in competitive and monopolised markets, DWL and price elasticity, categories of taxes: income and corporate taxes, wealth tax, sales tax, excise and custom duties and surcharges, direct and indirect taxes, tax criteria: efficiency criteria, equity criteria, the benefit principle, ability to pay principle and limitations of tax effort and the Laffer curve, tax structure of Pakistan – a critical analysis.
- Tax Incidence
Impact versus incidence of taxes, partial equilibrium view of product taxes and of factor taxes, partial equilibrium view of tax incidence, general equilibrium view of the tax incidence
- Cost-Benefit Analysis
Private cost – benefit analysis, NPV and IRR methods, Social cost – benefit analysis, measuring non – monetized costs and benefits, shadow prices and market prices, discount rate for social cost – benefit analysis, the evaluation of risk
- Public Expenditure
Evaluation of public expenditure: cost benefit analysis, types of benefits and cost: real versus pecuniary, direct versus indirect, and tangible versus intangible.
Process of budget making, development and non-development budget, budget procedure:balanced budget, deficit and surplus budget, budget procedure in Pakistan.
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- Aronson, R.J. Public Finance. McGraw Hill.
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- Hymen, David N. Public Finance: A Contemporary Application of Theory to Policy. Cengage Learning, 10th Edition.
- Musgrave, R.A. and P.B.Musgrave. Public Finance. McGraw- Hill.
- Newsman, H.E. An Introduction to Public Finance. Willey and Sons Inc.
- Rosen, H. S. and T. Gayer. Public Finance. McGraw Hill, 9th Edition.
- Rosen, Harvey. Public Finance. McGraw Hill.
- Saeed, Khawaja Amjad. Economy of Pakistan.
- Stigilitz, J. S. Economics of the Public Sector. W. W. Norton and Company, 3rd Edition.
- Zaidi, Syed Akbar. Issues in Pakistan Economy. Oxford University Press, 2nd Edition.