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Public Finance: A Contemporary Application of Theory to Policy

By David N. Hyman

12th Edition © 2021
Discipline:Economics
Course:Microeconomics
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Provide a trusted economics-oriented approach to public finance and public policy with the clear, organized approach in Hyman's PUBLIC FINANCE: A CONTEMPORARY APPLICATION OF THEORY TO POLICY, 12E. Written by respected author and economist David Hyman, this timely edition addresses public issues confronting the United States and other nations throughout the new millennium. This edition offers a balance of expenditure and tax topics coupled with information-driven and analytical tools to help readers understand major government policy and finance issues.

Students initially examine the economic theory of public goods and how to best provide them. The book then presents relevant applications to illustrate key economic points and ensure understanding. Current, real examples engage students, while coverage of today's hot topics sparks lively discussion and debate. This edition highlights national defense and homeland security, pollution rights, Social Security reform, federal tax reform and the Iraq war using the latest government statistics and recent scholarly research. An instructor's website and digital testing resources are also available for your support.

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About this product

Provide a trusted economics-oriented approach to public finance and public policy with the clear, organized approach in Hyman's PUBLIC FINANCE: A CONTEMPORARY APPLICATION OF THEORY TO POLICY, 12E. Written by respected author and economist David Hyman, this timely edition addresses public issues confronting the United States and other nations throughout the new millennium. This edition offers a balance of expenditure and tax topics coupled with information-driven and analytical tools to help readers understand major government policy and finance issues.

Students initially examine the economic theory of public goods and how to best provide them. The book then presents relevant applications to illustrate key economic points and ensure understanding. Current, real examples engage students, while coverage of today's hot topics sparks lively discussion and debate. This edition highlights national defense and homeland security, pollution rights, Social Security reform, federal tax reform and the Iraq war using the latest government statistics and recent scholarly research. An instructor's website and digital testing resources are also available for your support.

THIS EDITION OFFERS A UNIQUE, INTRIGUING VIEW INTO PUBLIC POLICY TODAY AND IN THE YEARS AHEAD. The author details policy and finance issues that will confront the United States and other nations throughout the new millennium. Students examine key topics related to public finance and taxation, including indifference curve analysis, producer and consumer surplus and tax incidence.

PRACTICAL APPROACH PRESENTS CRITICAL CONCEPTS IN THE CONTEXT OF REAL ISSUES OCCURRING RIGHT NOW. Unlike other texts that focus primarily on policy issues, author Dr. Hyman emphasizes the economic theory of public goods and how best to provide them today. He builds in applications to illustrate key economics points and reviews timely topics, such as national defense and homeland security, health care, pollution rights, Social Security reform and federal tax reform.

THIS EDITION TAKES A SOLID ECONOMICS-ORIENTED APPROACH TO PUBLIC FINANCE AND PUBLIC POLICY. Students gain a balanced view of both the revenue and expenditure sides of taxes and public goods. This provides a comprehensive understanding of economics affect public policy issues.

NUMEROUS CURRENT, REAL EXAMPLES AND ISSUES ENGAGE READERS AND PROMPT DISCUSSION AND DEBATE. Captivating Public Policy Perspectives address current issues in the news and how these issues impact public finance now and in the future. In addition, Global Perspectives boxes compare different taxing and public goods delivery systems, giving students an excellent overview of today's global markets.

Table of contents

Chapters

Cover Page
Title Page
Copyright Page
About the Authors
Preface
Acknowledgments
Part 1. The Economic Basis for Government Activity
Part 2. Government Expenditures and Policy in the United States: Selected Issues
Part 3. Financing Government Expenditures
Part 4. Taxation: Theory and Structure
Part 5. State and Local Government Finance

Part 1. The Economic Basis for Government Activity

Chapter 1. Individuals and Government
Preview this section ↗
Individuals, Society, and Government ↗
Governments and Political Institutions ↗
The Allocation of Resources between Government and Private Use ↗
How Government Goods and Services Are Distributed ↗
The Mixed Economy, Markets, and Politics ↗
Circular Flow in the Mixed Economy ↗
Government Expenditures in the United States ↗
Growth of Government Expenditures ↗
Structure of Federal Government Expenditure ↗
Mandatory versus Discretionary Federal Government Spending ↗
The Structure of State and Local Government Expenditure ↗
Financing Government Expenditure in the United States ↗
Market Failure and the Functions of Government: How Much Government is Enough? ↗
Aging Populations: Implications for Public Finance ↗
Summary ↗
Looking Ahead ↗
Key Concepts ↗
Review Questions ↗
Problems ↗
Additional Readings ↗
Internet Resources ↗
Appendix 1. Tools of Microeconomic Analysis ↗
Chapter 2. Efficiency, Markets, and Governments
Positive and Normative Economics
Normative Evaluation of Resource Use: The Efficiency Criterion
Marginal Conditions for Efficiency
Markets, Prices, and Efficiency Conditions
When Does Market Interaction Fail to Achieve Efficiency?
Monopolistic Power
How Taxes Can Cause Losses in Efficiency in Competitive Markets
How Government Subsidies Can Cause Losses in Efficiency
Market Failure: A Preview of the Basis for Government Activity
Equity versus Efficiency
The Trade-Off between Efficiency and Equity: A Graphic Analysis
The Trade-Off between Equity and Efficiency in a System of Competitive Markets
Positive Analysis Trade-Off between Equity and Efficiency
Summary
Looking Ahead
Key Concepts
Review Questions
Problems
Additional Readings
Internet Resources
Appendix 2. Welfare Economics
Chapter 3. Externalities and Government Policy
Externalities: A Classification and Some Examples
Externalities and Efficiency
Negative Externalities
Positive Externalities
Internalization of Externalities
Corrective Taxes: A Method of Internalizing Negative Externalities
How a Corrective Tax Could Be Used to Reduce Global Warming
Internalizing Negative Externalities Associated with Goods Sold in Imperfectly Competitive Markets
Corrective Subsidies: A Means of Internalizing Positive Externalities
Property Rights to Resource Use and Internalization of Externalities: The Coase Theorem
Exchange of Property Rights to Internalize a Negative Externality: An Example Illustrating the Coase Theorem
An Alternative Property Right Assignment
Significance of the Coase Theorem
Applying the Coase Theorem: Pollution Rights
Efficient Pollution Abatement Levels
Environmental Protection Policies in the United States
Emissions Standards versus Corrective Taxes
Command-and-Control Policies and Environmental Quality
Markets for Pollution Rights in Practice: Sulfur Dioxide Allowances, and Capping and Trading the Right to Emit
More on Market-Based Approaches to Pollution Control: How Trading Pollution Rights Can Reduce the Cost of Environmental Protection
Benefits and Costs of Environmental Protection Policy
Summary
Looking Ahead
Key Concepts
Review Questions
Problems
Additional Readings
Internet Resources
Chapter 4. Public Goods
Characteristics of Public Goods
Pure Public Goods and Pure Private Goods
An Example: Bread versus Heat
Provision of Private Goods and Public Goods: Markets and Government
Congestible Public Goods and Private Goods with Externalities
Education as a Public Good
The Demand For a Pure Public Good
Efficient Output of a Pure Public Good
A Numerical Example
A Cooperative Method of Efficiently Supplying Pure Public Goods: Voluntary Contributions and Cost Sharing
The Lindahl Equilibrium
Generalizing the Results
The Free-Rider Problem
Compulsory Finance
Summary
Looking Ahead
Key Concepts
Review Questions
Problems
Additional Readings
Internet Resources
Chapter 5. Public Choice and the Political Process
The Supply of Public Goods Through Political Institutions: The Concept of Political Equilibrium
Political Equilibrium
Elections and Voting
To Vote or Not to Vote
Determinants of Political Equilibrium
A Model of Political Equilibrium Under Majority Rule
Election Results under Majority Rule
The Median Voter
Uniqueness and Cycling of Outcomes Under Majority Rule
Single-Peaked and Multiple-Peaked Preferences
Pair-Wise Elections: The Phenomenon of Cycling
The Cause of Cycling
Existence of Multiple-Peaked Preferences
The Political Process
Constitutions
A Classification of Collective Choice Rules
Minority Rule
Majority Rule
Choice of the Collective Decision-Making Rule
Costs and Benefits of Collective Action
Unanimous Consent
Relative Unanimity and the Rights of Minorities
Plurality Rule
Point-Count Voting
Instant Runoff Voting
Political Parties and Political Equilibrium
The Median Voter, Political Parties, and Political Equilibrium under Majority Rule
The Effect of Nonvoting on Political Equilibrium
Voting on More Than One Issue at a Time: Logrolling
Implicit Logrolling
Logrolling and Efficiency
Special-Interest Groups and Their Impact on Political Equilibrium
Bureaucracy and the Supply of Public Output
Bureaucratic Behavior
Summary
Looking Ahead
Key Concepts
Review Questions
Problems
Additional Readings
Internet Resources

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