PE powerpoint Part BW 1 - Public Economics Principles and...

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Public Economics Principles and Practice Peter Abelson Applied Economics and University of Sydney
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Public Economics: Subject Outline: 10 Parts 1. Nature of Government 2. Markets and Government 3. Economic Evaluation and Policy 4. Public Choice 5. Building Economic Foundations 6. Public Supply of Goods and Services
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Public Economics: Outline (Cont.) 7. Public Finance and Taxation 8. Taxation in Practice 9. Social Welfare and Income Redistribution 10. Multi-Government Systems
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Public Economics Principles and Practice Part 1: Nature of Government Peter Abelson Applied Economics and Sydney University
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Chapter 1 Foundations of Public Economics Introduction to Issues Government and the State General Functions of Government Economic Functions of Government Historical Perspective Public Policy and Principles of Economic Analysis
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Introduction to Issues The defining attribute of government is power The mixed economy When and how should government intervene in the economy? Examples of topical public policy questions Fundamental questions: what are objectives and roles of government?
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Government and the State State and government defined Figure 1.1 : Typical Institutions of Government Role of Constitution and Bill of Rights Government consists of three main branches Budget and non-budget sectors Statutory authorities are also part of the public sector Government and the public sector Constraints on power of government
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Typical government institutions
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General Functions of Government Organic and mechanistic views of the state. Libertarians, Conservatives, Social Democrats, Socialists.
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Various views of role of government
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Economic Functions of Government Economics deals with the production and exchange of goods and services and the distribution of income and wealth For model of economy: see Figure 1.2 What is the role of government: - in production and exchange? - in distribution?
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The economic process
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Efficiency of markets The efficiency of willing trades and markets The power of the ‘invisible hand’: prices and incentives create efficient outcomes. Households get the goods they want at least cost. The First Theorem of Welfare Economics. But efficient markets do require laws of contracts, property and security.
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Economic roles of government Despite the invisible hand, three sets of issues: 1. Inefficient allocation of resources - market failures 2. Unequal distribution of income 3. Macroeconomics - instability These establish potential roles for government.
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Economists’ views of economic functions over 200 years Adam Smith and J.S.Mill: more than laisser- faire Changes in views: early twentieth century: increasing government after 2nd World War: 1945-80 more government since 1980: public choice theory, less government recent changes: globalisation More cautious views on role of government.
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