The course is aimed at providing – at an intermediate/advanced level – the conceptual tools necessary to analyse the public sector and a thorough grounding in the principles underlying the economic role of the state, the design of social insurance and the welfare state and the design of the tax system. The approach emphasizes the relation between theoretical thinking and concrete public policy options. By the end of the course the students should be able to critically discuss key issues in public economics and to demonstrate familiarity with a range of policy issues and relevant analytical tools. The course focuses on the following topics: the allocative function of the state as a response to market failures (public goods, externalities, information asymmetries, market power); cost-benefit analysis; the redistributive role of the state, the relation between equity and efficiency, and the problems of social and collective choice; tax theory; International issues in public finance.