Teaching Materials(textbook): –Randall G. Holcombe. Public Sector Economics:The Role of Government in The American Economy. China Renmin University Press, 2012.
Commendatory Reference Books: –1,John Leach. A Course in Public Economics. Shanghai University of Finance & Economics Press, 2005. –2,Joseph E. Stiglitz. Economics of the Public Sector (Third Edition). China Renmin University Press, 2005.
Doing Research in Public Ecnomics Public Finance journals –International Tax and Public Finance –Journal of Public Economics –National Tax Journal –Public Finance –Public Finance Quarterly General-interest journals –American Economic Review –Journal of Economic Perspectives –Journal of Political Economy –Quarterly Journal of Economics –Review of Economics and Statistics
Other sources –Journal of Economic Literature –Brookings Institution ’ s Studies of Government Finance –Congressional Budget Office reportsCongressional Budget Office reports –National Bureau of Economic Research working papersNational Bureau of Economic Research working papers –Tax Foundation ’ s Facts and Figures on Government Finance U.S. Government Printing Office publications –Statistical Abstract of the United StatesStatistical Abstract of the United States –Economic Report of the PresidentEconomic Report of the President –Budget of the United StatesBudget of the United States –U.S. Census of GovernmentsU.S. Census of Governments –Historical Statistics of the United States from Colonial Times to 1970
Public Finance data available on internet –Resources for Economists on the InternetResources for Economists on the Internet –U.S. Census BureauU.S. Census Bureau –University of Michigan ’ s Office of Tax Policy ResearchUniversity of Michigan ’ s Office of Tax Policy Research –Urban-Brookings Tax Policy CenterUrban-Brookings Tax Policy Center
Outline ： Topic 1 ： The public sector Topic 2 ： Principles for analyzing government Topic 3 ： Discussion: The market system and individual rights Topic 4 ： Externalities Topic 5 ： Public goods Topic 6 ： Discussion: Public policy toward public goods Topic 7 ： A theory of collective action Topic 8: Taxation(1): positive principles of taxation
Topic 9: Taxation(2): principles of tax policy Topic 10 ： Discussion: The tax system in China Topic 11: Government budgeting process Topic 12 ： Discussion: The reform of tax distribution in China Topic 13: Public expenditure: principles of taxation and redistribution Topic 14 ： Discussion: Social security and health care in China Topic 15: Fiscal policy and monetary policy Topic 16 ： Discussion: Practices of anti-economic- crisis by government
The U.S. economy is primarily market economy, but a significant proportion of its resources is allocated through the government----the public sector. How about China?
One goal of this course is to explain how the government allocates resources.( what does the government actually do?) Another goal is to establish a framework for analyzing what activities the government should undertake and how it should pay for those activities.( what does the government should do?)
The study of the public sector will build on an analysis of the public sector decision- making process.
Politics and Ecnomics In demacratic countries, governmental decision are made by some collective decision-making procedure.( directly or indirectly) What's the problem?
What are the problems of markets? –molopolies –externalities –imperfect information –……
There are analogous problems in the public sector –imperfect information to measure the demand for public goods –imbalance between benefits and costs –some groups can lobby more forcefully –government bureaucrats may not have incentive to implement the optimal policy
The Size of Government How to measure the size of government –Number of workers –Annual expenditures Types of government expenditure –Purchases of goods and services –Transfers of income –Interest payments Budget documents –Unified budget –Regulatory budget
State, Local, and Federal Government Expenditures (selected years) 1234 Total Expenditures (billions) 2005 Dollars (billions)* 2005 Dollars per capita Percent of GDP 19601236553,62724.3% 19702951,2015,85828.4% 19808431,7497,67930.2% 19901,8732,57410,28932.2% 20002,8873,23711,46129.4% 20053,876 13,06631.1% *Conversion to 2005 dollars done using the GDP deflator Source: Calculations based on Economic Report of the President, 2006 (Washington, DC: US Government Printing Office, 2006), pp. 280,284,323,379 Adjusting for Inflation Adjusting for Population Relative to Economy
international comparisons –the scope of governmental activity varies considerably from country to country –some governments in some countries undertake manufacturing activities –some governments provide services as varies as the production of television broadcasting, electricity, and telecommunications, and they own and operate mass transportation such as airlines, railroads, subways, and bus systems.
Source: Organization for Economic Cooperation and Development . Figures are for 2005. United States
Source: Economic Report of the President [2006, p. 377]. Note decline in Defense Note increase in Social Security, Medicare and Income Security
Source: Economic Report of the President [2006, p. 383]. Decline in highways Increase in public welfare
Source: Economic Report of the President [2006, p. 377]. Social insurance and individual income tax have become more important Corporate and other taxes have become less important
Source: Economic Report of the President [2006, p. 383]. Individual tax more important Property tax less important