AØKA08185U Tax Policy
The course gives an overview on the basic models used to analyze the efficiency implications and optimal design of tax policy. The course puts emphasis on linking formal analysis to empirical analysis and to discuss implications of theoretical and empirical findings for real world tax policy.
After completing the course, the student is expected to be able to:
Understand the concept of tax incidence including key theoretical predictions as well as common strategies for empirical measurement.
Understand the concept of economic efficiency including theoretical predictions as well as common strategies for empirical measurement.
Be able to account for the concept of tax salience as well as its implications for tax incidence and economic efficiency
Know key facts about commodity taxation in the real world
Understand the economic intuition behind theories of optimal commodity taxation as well as their implications for practical policy making
Be able to account for the concept of self-control problems (including how it can be modelled in economic theory) and its implications for optimal commodity taxation
Know key facts about income taxation in practice
Understand the economic intuition behind theories of optimal income taxation as well as their implications for practical policy making
Know key facts about firm taxation in practice
Understand the economic intuition behind theories of firm taxation as well as their implications for practical policy making
Understand the concept of internationaltax competition including key empirical facts and theoretical predictions
Know key institutional facts about offshore tax evasion
Be able to account for theories of tax evasion and important empirical findings
Derive predictions about tax incidence in simple theoretical models of partial equilibrium and interpret them in a straightforward language
Derive formulas that capture the measurement of of economic efficiency in a simple theoretical framework and interpret them in a straightforward language
Theoretically analyze tax incidence and economic efficiency under the assumption that tax salience is limited
Derive expressions that characterize optimal commodity taxation in the canonical Ramsey model and interpret them in a straightforward language
Derive expressions that characterize optimal commodity taxation in models assuming that some agents have self-control problems and interpret them in a straightforward language
Derive expressions that characterize optimal income taxation at the top and at the bottom of the income distribution as well as in the presence of exogenous tags and interpret them in a straightforward language
Derive expressions that characterize firm responses to dividend taxation under various assumptions about the firms and interpret them in a straightforward language
Derive predictions about corporate taxation under internationaltax competition and interpret them in a straightforward language
Discuss strengths and weaknesses of theoretical models of public finance ina straightforeward language
Discuss strengths and weaknesses of empirical strategies employed to measure key behavioral parameters in public finance
Discuss concrete policy issues using terms and concepts from the theory of taxation ina straightforeward language
The book “B. Salanié, The Economics of Taxation, Cambridge: MIT Press, 2003” serves as the main reference for most parts of the course. Research papers as well as lecture notes will complement the book.
2 hours lectures 1 to 2 times a week from week 36 to 50 (except week 42).
The overall schema for the Master can be seen at KUnet:
MSc in Economics => "Courses and teaching" => "Planning and overview" => "Your timetable"
Timetable and venue:
To see the time and location of lectures please press the link under "Timetable"/"Se skema" at the right side of this page. E means Autumn.
You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E20; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn – Weeks 31-5”
Press: “ View Timetable
Foreign students not enrolled please find more information at Study Economics.
- 7,5 ECTS
- Type of assessment
- Written examination, 3 hours under invigilationThe exam assignment is given in English and must be answered in English.
- Exam registration requirements
There are no requirements during the course that the student has to fulfill to be able to sit the exam.
- Without aids
- Marking scale
- 7-point grading scale
- Censorship form
- No external censorship
for the written exam. The exam may be chosen for external censorship by random check.
- Exam period
The exam takes place in the exam venues of the university:
17 December 2020
The exact time and room will be available in the Digital Exam from the middle of the semester.
In special cases, the exam date can be changed to another day and time within the exam period.
The written reexam takes place in the exam venues of the university:
15 February 2021
Note: If only a few students have registered the reexam it might change to oral including the date, time and place, which will be informed in KUNet or by the Examination Office.
Information about the reexam will be available in the Digital Exam early February.
Criteria for exam assesment
Students are assessed on the extent to which they master the learning outcome for the course.
To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.