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CHAPTER 1

CHAPTER 1. INTRODUCTION. Defining the Field of Study . Public Finance – the field of economics that analyzes government taxation and spending policies Public Sector Economics-see definition above Public Economics-see definition above What is not part of public finance.

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CHAPTER 1

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  1. CHAPTER 1 INTRODUCTION

  2. Defining the Field of Study • Public Finance – the field of economics that analyzes government taxation and spending policies • Public Sector Economics-see definition above • Public Economics-see definition above • What is not part of public finance

  3. Public Finance and Ideology • Organic view of government • Mechanistic view of government

  4. The Legal Framework • Federal government • Federal Constitutional provisions • Article 1, Section 8 • Article 1, Section 9 • 16th Amendment • 5th Amendment

  5. The Legal Framework • State governments • Federal constitutional provisions • 10th amendment • The State constitutions • Local governments • Derive power to tax and spend from the States • Fiscal independence of local governments

  6. 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

  7. State, Local, and Federal Government Expenditures (selected years) Relative to Economy Adjusting for Inflation Adjusting for Population

  8. United States

  9. Note increase in Social Security, Medicare and Income Security Note decline in Defense

  10. Increase in public welfare Decline in highways

  11. Social insurance and individual incometax have become more important Corporate and othertaxes have become less important

  12. Individual tax more important Property tax less important

  13. Changes in the Real Value of Debt • Inflation tax

  14. Doing Research in Public Finance • 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

  15. Doing Research in Public Finance • Other sources • Journal of Economic Literature • Brookings Institution’s Studies of Government Finance • Congressional Budget Office reports • National 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 States • Economic Report of the President • Budget of the United States • U.S. Census of Governments • Historical Statistics of the United States from Colonial Times to 1970

  16. Doing Research in Public Finance • Public Finance data available on internet • Resources for Economists on the Internet • U.S. Census Bureau • University of Michigan’s Office of Tax Policy Research • Urban-Brookings Tax Policy Center

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