Economics of Public Policy

By Prof. Debdulal Saha | IISER Mohali

Learners enrolled: 1257 | Exam registration: 269

ABOUT THE COURSE:

There has been a continuous development in the theoretical discourse and practical approaches to public policy debate and analysis over the past few decades. Policy and planning are integral parts of economics, shaping both economic process and efficient economic outcomes. This course aims to develop a deeper understanding of the economics of public policy— an area that is often underdiscussed in the traditional curricula. Drawing on key concepts, principles and theories of economics, this course will explore a broad spectrum of policy areas, including economic growth, welfare, healthcare, education, labour markets, climate change and environment, urbanization, and more.

INTENDED AUDIENCE: Undergraduate and Post-Graduate studies, Public Policy practitioners from organisations and government

PREREQUISITES: Intermediate microeconomics, Basic Macroeconomics

Summary

Course Status :	Ongoing
Course Type :	Elective
Language for course content :	English
Duration :	12 weeks
Category :	Economics & Social Sciences Economics
Credit Points :	3
Level :	Undergraduate/Postgraduate
Start Date :	19 Jan 2026
End Date :	10 Apr 2026
Enrollment Ends :	02 Feb 2026
Exam Registration Ends :	20 Feb 2026
Exam Date :	24 Apr 2026 IST
NCrF Level	4.5 — 8.0

Note: This exam date is subject to change based on seat availability. You can check final exam date on your hall ticket.

Page Visits

Course layout

Week 1:

Introduction to public policy: Definition, nature and types, linkages
Policy making process: agenda setting, policy stages, and disciplinary lenses
Economics and public policy
Principles of economics and public policy-I
Principles of economics and public policy-II

Week 2:

Concepts of economics and its applications to public policy
Macroeconomic components: National output, savings, consumption and investment
Economic growth and policy: Accumulation process and Harrod-Domar Model
Neoclassical economic growth and policy: Solow model growth
Economic Methods, Tools and Techniques in understanding problems and designing public policy

Week 3:

Utility, choice and optimisation
Budget and resource constraint
Public policy as a “commodity”: Demand, supply and equilibrium
Factors influencing demand and supply and types of goods
Price effects, income effects and substitution effects

Week 4:

Production and producer's behaviour in public policy
Importance of cost and supply function
Price elasticity: Demand and supply
Social efficiency: Consumer surplus and producer surplus
Social Efficiency: Market failure and deadweight loss

Week 5:

Pareto efficiency and economic efficiency
Market structure: Perfect competition and monopoly
Pricing strategy and measuring market power
Market failure and role of government
Types of good: Public, private, club and common resources

Week 6:

Externality theory: Economics of negative externalities
Economics of positive externalities
Addressing externality: Coase theorem
Coasian solution and problems
Public sector solution: Corrective taxation and subsidies

Week 7:

Price and Quantity approaches to address externalities
Market for pollution reduction and efficient control of pollution
Costs and benefits with uncertainty
Role of government in practice
Social welfare and measuring future cost and benefits

Week 8:

Trade-off between efficiency and equity, and social choice
Role of government in production, natural monopolies and government failure
Public choice
Individual choice, preferred level of government expenditure, and utility
Majority voting, Arrow’s Impossibility theorem and median voter theorem

Week 9:

Uncertainty and Expected Utility
Choice, Uncertainty, and Risk Aversion
Risk loving, risk neutral and marginal utility
Risky Assets and Trade-off between Risk and Return
Role of information: Adverse selection, Market for Lemon principles and moral hazard

Week 10:

Macroeconomic aggregate demand, multiplier and equilibrium output
Government expenditure, balanced budget multiplier
Budget, policy and crowding-out
Fiscal market and fiscal policy
Money market, monetary policy and its interaction with fiscal policy

Week 11:

Taxation: Structure, types and characteristics
Economic impacts of taxation and tax rates
Economic effects of taxation
Taxation, equity and fairness
Tax incidence and effects of elasticity

Week 12:

Tax incidence under imperfect competition
Tax, price level and tax incidence under general equilibrium
Tax, economic efficiency, elasticity and economic burden
Optimal Taxation: Ramsey's Taxation
Taxation in practice

Books and references

Acemoglu, D., & Robinson, J. A. (2012). Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York: Crown.
Akerlof, George A. (1970). The Market for 'Lemons': Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics, 84(3): 488-500.
Alkire, Sabina, James E. Foster, Suman Seth, Maria Emma Santos, Jose M. Roche and Paola Ballon (2015). Multidimensional Poverty Measurement and Analysis: Chapter 5 – The Alkire-Foster Counting Methodology. Working Paper 86. Oxford: Oxford Poverty & Human Development Initiative (OPHI).
Auerbach, A. J. (1982, November). ”The theory of excess burden and optimal taxation”. NBER Working Paper No. 1025. National Bureau of Economic Research. Retrieved from https://www.nber.org/system/files/working_papers/w1025/w1025.pdf
Buchanan, J. M., & Tullock, G. (1962). The Calculus of Consent: Logical Foundations of Constitutional Democracy. Ann Arbour: University of Michigan Press.
Drèze, J., & Sen, A. (2013). An Uncertain Glory: India and Its Contradictions. Princeton University Press.
Dye, Thomas R. (2017). Understanding Public Policy, New York: Pearson.
Froyen, Richard T. (2013). Macroeconomics: Theories and Policies (Global Edition, 10th Edition). Edinburgh: Pearson.
Gruber, Jonathan. (2013). Public Finance and Public Policy (5th Ed). New York: Worth Publishers.
Knill, Christoph & Jale Tosun. (2020). Public Policy: A New Introduction. London: Palgrave Macmillan.
Mankiw, Gregory N. (2015). Principles of Economics. Stamford, CT: Cengage Learning.
Mankiw, N. Gregory (2009). Macroeconomics (7th edition). New York: Worth Publishers.
MPI Methodology (Indian Case): https://www.niti.gov.in/sites/default/files/2021-11/National_MPI_India-11242021.pdf.
Pindyck, Robert S. & Rubinfeld, Daniel L. (2015). Microeconomics. New York: Pearson.
Schaffner, Julie (2014). Development Economics: Theory, Empirical Research and Policy Analysis, NJ: Wiley.
Snowdon, Brian and Howard R. Vane. 2005. Modern Macroeconomics: Its Origins, Development and Current State. MA, USA: Edward Elgar.
Stanton, Elizabeth A. (2007, February). “The Human Development Index: A History”. Working Paper, Global Development and Environment Institute, Tufts University.
Stiglitz, J. E. (2000). Economics of the Public Sector. 3rd edition, W.W. Norton.
Stiglitz, Joseph E. & Rosengard, Jay K. (2015). The Economics of Public Sector (4th Ed). New York: W. W. Norton Company.
Varian, Hal R. (2010). Intermediate Microeconomics: A Modern Approach. New York & London: W. W. Norton & Company.

Instructor bio

Prof. Debdulal Saha

IISER Mohali

Prof. Debdulal Saha is assistant professor in economics at the Department of Humanities and Social Sciences, Indian Institute of Science Education and Research (IISER) Mohali. Prior to joining IISER Mohali, he was a post-doctoral fellow at the International Centre for Development and Decent Work, University of Kassel, Germany, and taught at Tata Institute of Social Sciences (TISS), Guwahati campus over six years. His broad areas of research and teaching interest are development economics, applied microeconomics, informal economy, labour economics, urban studies, and public policy. He is the author of Informal Markets, Livelihood and Politics: Street Vendors in Urban India (Routledge, 2017) and co-author of Financial Inclusion of the Marginalised (Springer, 2013).

Course certificate

The course is free to enroll and learn from. But if you want a certificate, you have to register and write the proctored exam conducted by us in person at any of the designated exam centres.

The exam is optional for a fee of Rs 1000/- (Rupees one thousand only).

Date and Time of Exams: April 24, 2026 Morning session 9am to 12 noon; Afternoon Session 2pm to 5pm.

Registration url: Announcements will be made when the registration form is open for registrations.

The online registration form has to be filled and the certification exam fee needs to be paid. More details will be made available when the exam registration form is published. If there are any changes, it will be mentioned then.

Please check the form for more details on the cities where the exams will be held, the conditions you agree to when you fill the form etc.

CRITERIA TO GET A CERTIFICATE

Average assignment score = 25% of average of best 8 assignments out of the total 12 assignments given in the course.
Exam score = 75% of the proctored certification exam score out of 100

Final score = Average assignment score + Exam score

Please note that assignments encompass all types (including quizzes, programming tasks, and essay submissions) available in the specific week.

YOU WILL BE ELIGIBLE FOR A CERTIFICATE ONLY IF AVERAGE ASSIGNMENT SCORE >=10/25 AND EXAM SCORE >= 30/75. If one of the 2 criteria is not met, you will not get the certificate even if the Final score >= 40/100.

Certificate will have your name, photograph and the score in the final exam with the breakup.It will have the logos of NPTEL and IISER Mohali. It will be e-verifiable at nptel.ac.in/noc.

Only the e-certificate will be made available. Hard copies will not be dispatched.

Once again, thanks for your interest in our online courses and certification. Happy learning.

- NPTEL team

SWAYAM Helpline / Support