Taxation and Policy Analysis

FOR11 Taxation and Policy Analysis

  • Topics


    The course will use economic theory to investigate how taxes affect the decisions of investors, firms, employees, consumers and voters. We also investigate how taxation may distort or enhance economic efficiency, and we study how the burden of taxation is shared between producers and consumers in the economy. The topics covered in this course will be closely related to pressing policy questions that are discussed by politicians, special-interest groups and policy consultants. For example, many governments are lowering the tax rates on labor and corporate income, and replacing the lost revenue with higher excise duties on goods that are perceived to cause damage to society, such as alcohol and tobacco products and polluting goods, such as petroleum and electricity. The rationale is that lower tax rates on employees and businesses will increase labor supply and business activity and investment, while higher excise duties will decrease the consumption of products that are socially undesirable. Who are the `winners¿ and the `losers¿ of this change in policy? Under what conditions is it welfare-enhancing to decrease income tax rates and increase excise duties? And, most importantly, how can we determine whether these conditions are satisfied in countries such as Norway?

  • Learning outcome

    Learning outcome

    At the end of this course students will:

    • be able to analyze how taxes affect economic decisions made by firms, workers and consumers
    • know how to design green taxes, i.e. taxes that correct environmental problems and at the same time rise revenue for the government
    • be able to analyze how different forms of taxation affect the trade-off between economic efficiency and equality
    • understand how the government can use taxation to redistribute resources from the rich to the poor
    • be able to weight the cost and benefits of changes in tax policy
    • understand how changes in tax policy and policy experiments can be used to quantify the economic effects of taxation
    • be able to assess whether a specific policy, such as excise duties on gasoline, achieve their intended aim
    • be able to apply economic theory to real-world issues faced by governments, consumers and businesses 

  • Teaching


    Plenary Lectures

  • Required prerequisites

    Required prerequisites

    Students should have passed a first-year course in each of the following subjects: Mathematics, Statistics and Microeconomics

  • Credit reduction due to overlap

    Credit reduction due to overlap

    Overlap with VOA048

  • Requirements for course approval

    Requirements for course approval

    Students are required to write a term paper in groups of 2-3 students depending on the class size. Students can only participate in the final exam after the term paper has been accepted

  • Assessment


    Written Exam (3 hours). Answers must be written in English.

  • Grading Scale

    Grading Scale

    Grading scale A-F

  • Computer tools

    Computer tools


  • Semester



  • Literature


    Jonathan Gruber, Public Finance and Public Policy, 5th edition, Worth Publishers.

    Recommended readings: To be decided


ECTS Credits
Teaching language

Course responsible

Floris Zoutman, Department of Business and Management Science