Benefit-cost analysis
Lecturer to be advised
7 points
* Two 1.5 hour lectures per week
* Second semester
*
Clayton
* Prerequisite: ECO4650 or equivalent
Objectives On completion of this subject students should be able to apply the analytical framework, economic principles and techniques required for the economic evaluation of investment projects, policies and regulations, especially those involving the public sector; appreciate the welfare economic foundations upon which economic evaluation is based; be able to design studies to estimate benefits and costs, in the presence of market distortions (for example, controls, taxes and externalities), and for non-marketed goods (for example, time, noise, safety).
Synopsis Topics include development and application of microeconomic theory for the economic evaluation of (public) sector investment projects and policies; investment analysis and criteria, discounting techniques; Pareto potential improvement criterion, shadow pricing, social discount rate distribution issues, secondary benefits, risk and uncertainty, cost-effectiveness.
Assessment Written (3000-word essay): 40%
* Examination (3 hours):
60%
Prescribed texts
Department of Finance Handbook of cost-benefit analysis AGPS, 1991
Sugden R and Williams A The principles of practical cost-benefit analysis OUP, 1978
Reference
Zerbe R O Jr and Dively D D Benefit-cost analysis: In theory and practice Harper Collins
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