Course Contents

• Introduction to Public Finance: Public Finance; Individuals, society and government; Allocation of resources between government and private sector; How government goods and services are distributed; Mixed economy, markets and politics. • Public Finance and Ideology: Organic view of government; Mechanistic view of government. • Why study Public Finance: Four questions of public finance; When should government intervene; How might government intervene; What are the effects of government intervention; Why do governments do what they do; Policy debates on social security, health care and education • Public Goods: Public goods defined, characteristics and aspects; Private goods; Private provision of public goods; Free rider problems • Public Choice and the Political Process: Public choice; Voting and resource allocation, Direct majority voting, Log rolling, Electing; Participants in political process, Voters, Politicians, Bureaus, Pressure groups and Lobbies; Public Choice Theory-foundation for government failure. • Externalities: Definition, nature and characteristics • Cost Benefit Analysis (CBS) and Government Investments: CBS defined and how it is used by government to choose among different investments • Budgeting, Taxation and Financial Management: Budget as an instrument of Public Policy; Types of Taxation; Other revenue sources; Aspects of financial management- capital budgeting, debt management, risk management, purchasing • Structure of Taxation in Pakistan: Structure of government and taxation, legislative functions, intergovernmental fiscal relations; Understanding Pakistan’s taxation structure; Public Finance basic facts; Key issues in taxation • Debt and Deficit: Does fiscal deficit matter- Does budgets always be balanced, Problem of measuring deficit, Fiscal deficit and distribution, Macroeconomic Implications; Critical concerns regarding Pakistan’s fiscal deficit; Domestic and foreign debt crisis • Local Government and Political Economy of Decentralization in Pakistan: Local Government in Pakistan; Financing local government; Military rule and local government system; Is local government the answer. • Fiscal Federalism in Pakistan: Pre-independence evolution and devolution; National Finance Commission Award- Introduction, NFC 2010 and its features; 18th Amendment-way forward to devolution.

Course Synopsis

This course aims to provide students with an understanding of the underlying concepts and trade offs involved in public finance policy alternatives. To enable the students to understand the basic role of government in a modern state. To facilitate the students with the use of public policy and its tools for the economic development and welfare maximization of the nation.

Course Learning Outcomes

• It will prepare students to be able to understand Public Finance data. • It will equip students to engage constructively in the formulation, implementation and evaluation of public finance policies. • Students shall have an ability to identify, formulate and solve public sector problems.