Public Finance / Edition 9

by Harvey Rosen, Ted Gayer

Overview

Public Finance 9/e benefits from the combined efforts of Harvey Rosen’s market-leading book and co-author Ted Gayer’s research and government agency experience. This combination of experience is able to explain as clearly as possible how the tools of economics can be used to analyze government expenditure and tax policies. This new edition incorporates recent developments and along the way takes students to the frontiers of current research and policy. While the information presented is cutting edge and reflects the work of economists currently active in the field, the approach makes the text accessible to undergraduates whose only prior exposure to economics is at the introductory level.

All of the changes in the Ninth edition were made to further the authors’ goal of providing students with a clear and coherent view of the role of government spending and taxation. The authors’ years of policy experience have convinced themselves that modern public finance provides a practical and invaluable framework for thinking about policy issues. The goal is simple: to emphasize the links between sound economics and the analysis of real-world policy problems.

Product Details

ISBN-13:	9780073511351
Publisher:	McGraw-Hill Higher Education
Publication date:	09/25/2009
Edition description:	Older Edition
Pages:	608
Product dimensions:	7.90(w) x 10.10(h) x 1.20(d)

About the Author

Harvey S. Rosen is a professor of economics and business policy at Princeton University. He was appointed by President Bush to serve on the Council of Economic Advisors.

Table of Contents

Part 1	Getting Started
1	Introduction	3
	Public Finance and Ideology	4
	Government at a Glance	7
	Summary	16
	Discussion Questions	17
	Selected References	18
Appendix	Doing Research in Public Finance	18
2	Tools of Positive Analysis	20
	The Role of Theory	21
	Methods of Empirical Analysis	24
	Concluding Remarks	30
	Summary	31
	Discussion Questions	31
	Selected References	32
3	Tools of Normative Analysis	33
	Welfare Economics	33
	The First Fundamental Theorem of Welfare Economics	41
	Fairness and the Second Fundamental Theorem of Welfare Economics	42
	Market Failure	46
	Buying into Welfare Economics	48
	Summary	50
	Discussion Questions	50
	Selected References	52
Part 2	Analysis of Public Expenditure
4	Public Goods	55
	Public Goods Defined	55
	Efficient Provision of Public Goods	58
	The Privatization Debate	65
	Education	70
	Public Goods and Public Choice	76
	Summary	76
	Discussion Questions	77
	Selected References	78
Appendix	Preference Revelation Mechanisms	79
5	Externalities	81
	The Nature of Externalities	82
	Graphical Analysis	84
	Private Responses	88
	Public Responses to Externalities	92
	The US Response	99
	Implications for Income Distribution	101
	Positive Externalities	103
	Summary	107
	Discussion Questions	107
	Selected References	110
6	Political Economy	111
	Direct Democracy	112
	Representative Democracy	122
	Explaining Government Growth	133
	Summary	140
	Discussion Questions	141
	Selected References	142
7	Income Redistribution: Conceptual Issues	143
	Distribution of Income	144
	Rationales for Income Redistribution	148
	Expenditure Incidence	156
	Conclusion	162
	Summary	162
	Discussion Questions	163
	Selected References	164
8	Expenditure Programs for the Poor	165
	A Quick Look at Welfare Spending	165
	TANF	166
	Income Maintenance and Work Incentives	167
	The Earned Income Tax Credit	176
	Supplemental Security Income	178
	Medicaid	178
	Food Stamps and Child Nutrition	181
	Housing Assistance	182
	Programs to Enhance Earnings	184
	Overview	185
	Summary	188
	Discussion Questions	188
	Selected References	190
9	Social Insurance I: Social Security and Unemployment Insurance	191
	Why Have Social Insurance?	192
	Structure of Social Security	194
	Effects on Economic Behavior	203
	Long-Term Stresses on Social Security	206
	Social Security Reform	207
	Unemployment Insurance	210
	Conclusions	213
	Summary	213
	Discussion Questions	214
	Selected References	215
10	Social Insurance II: Health Care	216
	What's Special About Health Care?	216
	The US Health Care Market	219
	The Role of Government	222
	The Twin Issues: Access and Cost	228
	New Directions for Government's Role in Health Care	233
	Summary	236
	Discussion Questions	237
	Selected References	238
11	Cost-Benefit Analysis	239
	Present Value	240
	Private Sector Project Evaluation	243
	Discount Rate for Government Projects	247
	Valuing Public Benefits and Costs	250
	Games Cost-Benefit Analysts Play	257
	Distributional Considerations	258
	Uncertainty	260
	An Application: Are Reductions in Class Size Worth It?	261
	Use (and Nonuse) by Government	263
	Summary	265
	Discussion Questions	265
	Selected References	267
Appendix	Calculating the Certainty Equivalent Value	267
Part 3	A Framework for Tax Analysis
12	Taxation and Income Distribution	273
	Tax Incidence: General Remarks	274
	Partial Equilibrium Models	278
	General Equilibrium Models	292
	Conclusions	300
	Summary	300
	Discussion Questions	301
	Selected References	303
13	Taxation and Efficiency	304
	Excess Burden Defined	305
	Excess Burden Measurement with Demand Curves	313
	Differential Taxation of Inputs	321
	Does Efficient Taxation Matter?	324
	Summary	324
	Discussion Questions	325
	Selected References	326
Appendix A	Formula for Excess Burden	326
Appendix B	Multiple Taxes and the Theory of the Second Best	327
14	Efficient and Equitable Taxation	329
	Optimal Commodity Taxation	329
	Optimal User Fees	336
	Optimal Income Taxation	339
	Politics and the Time Inconsistency Problem	343
	Other Criteria for Tax Design	344
	Overview	354
	Summary	354
	Discussion Questions	355
	Selected References	356
Part 4	The United States Revenue System
15	The Personal Income Tax	359
	Basic Structure	359
	Defining Income	361
	Excludable Forms of Money Income	364
	Exemptions and Deductions	370
	Rate Structure	380
	Taxes and Inflation	385
	The Alternative Minimum Tax (AMT)	388
	Choice of Unit and the Marriage Tax	390
	Treatment of International Income	394
	State Income Taxes	395
	Politics and Tax Reform	396
	Summary	397
	Discussion Questions	398
	Selected References	400
16	Personal Taxation and Behavior	401
	Labor Supply	402
	Saving	411
	Housing Decisions	421
	Portfolio Composition	424
	A Note on Politics and Elasticities	425
	Summary	426
	Discussion Questions	426
	Selected References	427
17	The Corporation Tax	428
	Why Tax Corporations?	428
	Structure	429
	Incidence and Excess Burden	434
	Effects on Behavior	437
	State Corporation Taxes	444
	Taxation of Multinational Corporations	445
	Corporation Tax Reform	449
	Summary	452
	Discussion Questions	453
	Selected References	454
18	Deficit Finance	455
	How Big Is the Debt?	455
	The Burden of the Debt	461
	To Tax or to Borrow?	466
	Overview	470
	Summary	471
	Discussion Questions	471
	Selected References	472
19	Taxes on Consumption and Wealth	473
	Retail Sales Tax	473
	Value-Added Tax	478
	Hall-Rabushka Flat Tax	482
	Cash-Flow Tax	483
	Efficiency and Fairness of Personal Consumption Taxes	484
	Income versus Consumption Taxation	487
	Wealth Taxes	491
	Estate and Gift Taxes	492
	Summary	499
	Discussion Questions	500
	Selected References	501
Part 5	Multigovernment Public Finance
20	Public Finance in a Federal System	505
	Background	506
	Community Formation	507
	The Tiebout Model	508
	Optimal Federalism	512
	Property Tax	521
	Intergovernmental Grants	530
	Overview	539
	Summary	539
	Discussion Questions	540
	Selected References	541
Appendix	Some Basic Microeconomics	542
	Glossary	567
	References	577
	Author Index	595
	Subject Index	599

Editorial Reviews

This text on public finance for undergraduates and for public administration graduate programs describes the institutional and legal settings of finance and emphasizes the links between economic analysis and current political issues. Chapters provide an overview of government's role in the economy, and explore tools for positive and normative analysis, tax analysis, and the US revenue system. The appendix discusses basic microeconomics. This fourth edition includes new chapters on health care issues and revised material on taxation. Annotation c. Book News, Inc., Portland, OR (booknews.com)

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