文档介绍：Chapter 1 - Introduction
Public Economics
1
Public Finance Defined
Public finance is about the taxing and spending activities of the government.
Also known as “public sector economics” or “public economics.”
Focus is on microeconomic functions of government – polices that affect overall unemployment or price levels are left for macroeconomics.
Scope of public finance unclear – government has role in many activities, but focus will be on taxes and spending.
2
Public Finance and Ideology
How should a government function in economic sphere?
Organic view – community stressed above individual. Goals of society set by the state.
Mechanistic view – government is a contrivance created by individuals to better achieve their individual goals. Individual, not group, is at center stage.
This is the viewpoint taken in the textbook.
3
Government at a Glance
Legal framework
Federal government
No real constraints on spending in Constitution
Taxes e originate in House of Representatives.
Equal tax rates across states.
e tax came from 16th amendment to Constitution.
Can run budget deficits
State and local government
Can impose spending / taxing restrictions on itself.
Many states cannot run budget deficits.
4
Government at a Glance
Size of government – how to measure?
Number of government employees
Annual expenditures
Purchases of goods and services, transfers, and interest payments
Unified budget – In 2001, $ trillion spent at federal level, and another $ trillion at state and local levels.
5
Government at a Glance
These numbers ignore activities that do not have explicit outlays, but substantial effects on resource allocation.
Regulations, for example.
Conceivably, could construct a “regulatory budget” to account for these costs, but difficult pute.
6
Government Expenditure
Some numbers
Annual expenditures have grown by a factor of 290 from 1929-2001.
Inflation, population also changing. Real, per-capita expenditure still 10 times as large.
As percentage of