Topics in Dynamic Public Finance

Abstract

The purpose of this part of the course is to study some simle public finance problems when there is heterogeneity in the population.These differences can be either in their productivity or in their value of leisure. Such differences imply that there is differences between individuals in their trade-off between leisure and work. It is assumed that the government cannot directly observe this differences, only observe the individuals market choices. For example, governments observe income, but not the effort exerted to get this income. The general problem is to redistribute and provide some public good. We will start by static examples and then go to some dynamic.