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Public Finance A Normative Theory von Tresch, Richard W. (eBook)

  • Verlag: Elsevier Reference Monographs
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Public Finance

Public Finance remains the premier textbook on the normative theory of government policy, with the third edition propelling into the twenty-first century its examination of what government ought to be doing instead of what it is doing. The welfare aspects of public economics receive extensively renewed examination in this third edition. With four new chapters and other significant revisions, it presents detailed and comprehensive coverage of theoretical literature, empirical work, environmental issues, social insurance, behavioral economics, and international tax issues. With increased emphasis on the European Union, it is rigid enough for use by PhDs while being accessible to students less well trained in math. Moves skillfully from explaining normative theory to applying it in mathematically compact and precise terms Adds new chapters on social insurance, medical care, social security pensions, behavioral public economics, and international public finance Includes new pedagogical supplements, including end-of-chapter questions and answers Emphasizes European examples
Professor Richard W. Tresch earned a bachelor's degree from Williams College in 1965 and a doctorate in economics in 1973 from Massachusetts Institute of Technology, where he was a teaching assistant prior to his arrival at Boston College. He joined the Boston College faculty in 1969 and throughout his 43-year career has served as Chairman of the Department of Economics, Director of Graduate Studies, and Director of Undergraduate Studies. In 1996, chosen as Massachusetts Professor of the Year by the Carnegie Foundation for the Advancement of Teaching. He was one of 585 national entrants in the foundation's US Professors of the Year Program, which salutes outstanding undergraduate instructors; its award is recognized as one of the most prestigious honors bestowed upon professors. 'I am quite humbled by the award, and extremely grateful to the Carnegie Foundation,' Tresch said. 'The greatest honor, however, is to have been nominated by Boston College. There are so many good teachers here and to be chosen to represent them in the program is something I truly value.' A member of the American Economic Association, Tresch served on the board of editors for the American Economic Review, and has contributed to New England Journal of Business and Economics and Public Finance. He is the editor of a four-volume major reference work on public sector economics. The third edition on his textbook, Public Finance: A Normative Theory publishes in November, 2014.


    Format: ePUB
    Kopierschutz: AdobeDRM
    Seitenzahl: 535
    Sprache: Englisch
    ISBN: 9780124160330
    Verlag: Elsevier Reference Monographs
    Größe: 13123 kBytes
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Public Finance

Chapter 1 Introduction to Normative Public Sector Theory


Chapter 1 describes the norms that underlie the mainstream economic theory of the public sector and then discusses how these norms dictate the fundamental normative questions within the theories of public expenditures, taxation, and fiscal federalism. The chapter also considers the competing perspectives of public choice and behavioral public finance.

Asymmetric information; Behavioral economics; Consumer sovereignty; Decentralized policies; Decreasing cost production; End-results equity; Externalities; Fiscal federalism; Humanism; Pareto optimality; Process equity; Public choice; Two fundamental theorems of welfare economics
Chapter Outline

The Fundamental Normative Questions 4

Government Expenditure Theory: Philosophical Underpinnings 5

Humanism, Consumer Sovereignty, Capitalism, and the Government 5

The Legitimate Functions of Government 6

The Goals of Government Policy 6

Efficiency 6

Equity 6

Process Equity 6

End-Results Equity 7

The Government as Agent 8

Government Expenditure Theory and Market Failure 9

The Fundamental Theorems of Welfare Economics 9

The Distribution of Income 9

The Allocation of Resources 10

Private or Asymmetric Information 10

The Government Sector in the United States 12

The Theory of Taxation 14

Fiscal Federalism 15

The Theory of Public Choice 15

Behavioral Public Finance 17

Summary 18

References 19
Public sector economics is the study of government economic policy. Its primary goal is to determine whether government policies promote a society's economic objectives. This happens to be quite an ambitious goal. The advanced Western market economies experienced enormous growth in the size and influence of their government sectors during the last half of the twentieth century, and economic analysis of the public sector has reflected this growth. No single textbook on public sector economics can possibly hope to capture the variety and richness of the professional economic literature on government policy, even at an introductory level. Consequently, a public sector text must begin by defining its limits. We have chosen to limit both the subject matter and the approach of this text. The text concentrates on the microeconomic theory of the public sector in the context of capitalist market economies. The macroeconomic theory of the public sector, commonly referred to as fiscal policy, receives little attention. In addition, the text focuses on the normative theory of the public sector rather than the positive theory. The normative theory considers what governments ought to be doing in accordance with norms that are broadly accepted by a society. In contrast, the positive theory of the public sector emphasizes the incentives generated by existing governmental institutions and policies and their resulting economic effects, without necessarily judging their effectiveness in terms of some accepted norms. A complete separation of normative and positive theory is impossible, of course. A normative analysis must make assumptions about how agents will respond to various government polices; otherwise, it cannot predict whether a given policy will achieve particular norms. Therefore, the text pays some attention to the empirical literature on the responses to government policies, for example, how the supply of labor responds to income taxation. In every chapter, though, our primary emphasis is on the normative theory of government policy under standard assumptions about economic behavior, such as utility maximization by co

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