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Course Details

Course Number: 90-774

Public Expenditure Analysis

Units: 12

This is a companion course to Public Finance, 90- 736, and is designed to deal with the expenditure side of the public sector budget in a series of modules. It has been conceptualized as a blending of private finance and public expenditure principles. The former provides a systematic framework, capital budgeting, for the evaluation of private-sector projects, while the latter builds on the former, and introduces issues of externalities, and the social rate of discount. The two courses, Public Finance and Public Expenditure Analysis, may be viewed as capstone courses for those Heinz students seeking careers in the public sector, or those parts of the private sector that routinely deal with the public sector.

The course is divided into 4 modules. In Module 1, the course develops the essential techniques of private sector evaluation principles. In Module 2, special problems which arise in the evaluation of public sector projects are discussed; a variety of evaluation techniques and applications especially suited to public sector projects are then examined. In Module 3, actual cost-benefit studies in the policy areas of education, environment, health, criminal justice, transportation and recreation are examined. In Module 4, evaluation at a high level of aggregation is dealt with through the use of generational accounting models. These models are examples of aggregate long and short-term public evaluation problem areas typically dealt with by national governments. Also in Module 4 groups of students perform and report a critical review of a cost-benefit study they have chosen. Throughout the course, similarities and differences between the public sector and private sector are emphasized, and examples from the real world are
discussed in class.

The course presumes that the student has had courses in microeconomics and economic statistics, owns a calculator capable of doing x a/b or x 1.361, and is familiar with the use of spreadsheet packages on a personal computer. Students are expected to bring their calculator to each class, and perform calculations in conjunction with class activities. Also, it is assumed that each student has had or is taking a course in public finance, and is or will become familiar with the material in the Musgrave and Musgrave text, Public Finance in Theory and Practice, the basic principles of public finance which justify government intervention in the market place and underlie public expenditure
policy.

Faculty:
Robert P Strauss