TAILIEUCHUNG - Lecture note Public finance (10th Edition) - Chapter 6: Political economy

Learning outcome of this chapter: Identify the critical assumptions of the two-sector model, define what is meant by a Pareto-optimal allocation of resources; articulate the three conditions for a general equilibrium; distinguish between allocative efficiency, X-efficiency, and ‘dynamic’ efficiency (or economic growth); discuss the broad categories of market failure; explain the allocative, distributive, and stabilisation functions of government; distinguish between direct and indirect forms of government intervention. | POLITICAL ECONOMY Chapter 6 Political Economy The field that applies economic principles to the analysis of political decision-making. How well do various decision-making procedures translate the preferences of their citizens into collective action? 6- Direct Democracy Unanimity Rules r per year 0 0’ Adam’s share (SA) Eve’s share (SE) The Lindahl Model r* S* Given efficient quantity level r* and demand curves, Adam pays 0-S* and Eve pays 0’-S*. Unanimity can result in efficient level if Lindahl price – tax share per individual – were allowed 6- box and labels 1st click – Adam’s D 2nd click – Eve’s D 3rh click – equilibrium r and S Feasibility of Unanimity Rules in Reaching Equilibrium Practical problems Strategic behavior: do people vote sincerely or under report value to escape tax liability? Time to reach equilibrium given many citizens. 6- Direct Democracy Majority Voting Rules Majority voting rule – one more than half of the voters must favor a measure for

• Tài chính doanh nghiệp
• Public finance
• Lecture Public finance
• Public Economics
• Political economy
• Public employees
• Representative democracy
• Federal system
• Fiscal federalism
• Public expenditure
• Public good
• Public spending
• Public education
• Tiebout model
• Public sector economics
• Federal government
• The corporation tax
• Tax equity
• Public goods
• Public services
• Inflation taxation
• Education Increase Earnings
• Public education improves quality
• Interpreting deficit
• Burden of the debt
• Neoclassical model
• Median voter model
• Special interest
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• Legal framework
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• Coase Theorem
• Public Responses
• Tools of positive analysis
• Positive analysis
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• Welfare economics
• Nature of externalities
• Graphical analysis
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• Internal rate
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• Health care market
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• Haig simons income
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