Public finance and public policy: a political economy perspective on the responsibilities and limitations of government

This new edition restructures and updates the political economy view of the responsibilities and limitations of government. Public-choice and behavioural concepts are prominent. Gender issues are included. Technical concepts are explained from first principles. Economic theory is rigorously applied. Excessive technicality is avoided. The book integrates traditional public finance topics - taxation, public goods, externalities, and income redistribution - with political self-interest, bureaucracy, voting, rent seeking, corruption, and the common-pool problem of public spending. Social justice is viewed as income equality, equality of opportunity, or the right to benefit from one's own effort. Public policies studied include the environment, education, health insurance, welfare payments and entitlements under moral hazard, unemployment insurance, paternalistic impositions, and defence and public safety. This book is ideal for advanced undergraduate and graduate courses that combine economic theory with a real-world perspective on the politics of public finance and public policy. A broad scope makes the book suitable for students in all countries.

Preface to the 3rd edition -- Personal and public finance -- Markets - personal finance -- Government - public finance -- Public goods -- Social costs and benefits -- Restraint on personal choice -- Information and efficiency -- Responsibilities of government - social justice and the rule of law -- Social insurance and moral hazard -- Social justice in taxation -- Social justice without government -- The rule of law: protection of life and property -- Limitations of government - politics and policies -- Voting and the common pool problem -- Politics and efficiency -- Politics and income distribution -- Personal incentives in government -- Concluding overview -- The growth of government and the need for government topics in public policy -- Health care and health insurance -- Education -- Entitlements and equality of opportunity -- Welfare payments -- Unemployment insurance -- Pensions and provision for retirement -- National security -- Public safety and terror -- Supplements -- A competitive market economy -- The theory of rent seeking in contest models -- Compensating and equivalent variations : measures of the excess burden of taxation with income effects -- Non-convexities and externalities -- General equilibrium with a public good and the role of information -- Risk aversion -- The arrow impossibility theorem -- Voting systems and the condorcet winner -- Collective action for collective benefit -- The theory of political competition