Public finance
economics that deals with budgeting the revenues and expenditures of a public sector entity, usually government. Governments, like any other legal entity, can take out loans, issue securities and invest. Based on the taxing authority of the entity, they issue bonds such as tax increment bonds or revenue bonds. A government bond or security may give tax advantages to its owners.
The Economic Basis of Government Activity
Efficiency
-Market efficiency conditions
-Pareto Efficiency
-A model of efficient resource use
-Equity vs efficiency
-Market failures
- Government efficiency - how efficient are governments at obtaining their objectives? how much of their expenditure actually goes to where it is intended? what types of waste exist?
- scope of government activities - what do governments spend money on? what should governments spend money on? what can be left to Markets? Why governments should be concerned with Externalities, Public goods, (vs.
Externalities and Government Policy
-Internalization of externalities
-The Coase Theorem
The Coase theorm is the idea that government, with the power establish the rights to use resource, can internalize externalities when transaction costs of bargaining are zero.
Public Goods
-The characteristics of public goods
-The demand for pure public goods
-Efficient output of a pure public good
-The Freerider problem
Public Choice and the Political Process
-Arrow's impossibility theorm
Government expenditures
Income Distribution
- Income distribution - How will these government expenditures influence the incomes of one group relative to another group? Government programs like ?disaster relief? transfer wealth to people that have suffered a loss due to natural disaster. Social security transfers wealth from the young to the old. Engaging in a war transfers wealth to certain sectors of society. Public education transfers wealth to families with children in these schools. Public road construction transfers wealth from people that do not use the roads to those people that do (and to those that build the roads).
-Income Security
-Employment insurance
-Health Care
Financing Government Expenditures
Forms of financing
- Taxes The various types of taxes. - taxation efficiency - taxation fairness
- User Fees
- Government borrowing - types of government bonds - effects on the bond market
Taxation, Prices and Efficiency
-Types of taxes
-Inpact of taxes on market prices and efficiency
Government Debt
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