EC270: Public Finance: Designing Effective Government Policy

Governments play a critical role in efficiently allocating resources, distributing income and stabilising the economy through the effective management of public finances.

With growing inequality within and among different nations, and in an increasingly volatile global economic environment, it is even more important that public finances are managed effectively to meet social and economic goals.

This course provides a broad, up-to-date introduction to the economic analysis of public policy issues. Drawing on microeconomic theory, the course focuses on the development of analytical tools and their application to key policy issues relating to the spending, taxing and financing activities of government. You will be introduced to cutting-edge research in the field, including recent developments in public economics in areas such as behavioural public economics, new empirical methods and policy innovations.

By the end of the course, you will have an appreciation of the analytical methods used in economics for the study of the public sector and the role of the state. By applying the theory to real-world scenarios, you will have a thorough grounding in the principles underlying the role of the state, the design of social insurance and the welfare state, as well as the design of the tax system. Having engaged with these important and challenging problems, you will understand the practical problems involved in implementing these principles.

Prerequisites: Introductory microeconomics (to the equivalent of EC101).

Level: 200 level. Read more information on levels in our FAQs

Fees: Please see Fees and payments

Lectures: 36 hours

Classes: 18 hours

Assessment: Two written examinations (each worth 50% of the final grade)

Typical credit: 3-4 credits (US) 7.5 ECTS points (EU)

Please note: Assessment is optional but may be required for credit by your home institution. Your home institution will be able to advise how you can meet their credit requirements. For more information on exams and credit, read Teaching and assessment

This course is suitable if you want to develop a better understanding of the role of the state in managing public finances and the methods that governments can use to efficiently allocate resources, distribute income and stabilise the economy.

It is especially suitable if you are pursuing further study in economics, or are targeting a career in policy development, government, consulting or business management. 

• Analyse key issues in public economics and the role of the State
• Examine the issues relating to welfare analysis, social insurance, and pensions
• Assess the tax policy and its impact on individuals and companies
• Discuss the issues of privatisation, outsourcing, and the proper scope of government
• Present a coherent argument orally and in writing on topics in public economics
• Demonstrate a familiarity with a range of policy issues and relevant analytical and empirical tools

The design of this course is guided by LSE faculty, as well as industry experts, who will share their experience and in-depth knowledge with you throughout the course.